One question we get asked a lot here at itsettled is “My customer wants to set up a payment plan, what do I do?!” We know that it can be intimidating to set out a payment plan - and it can be frustrating to hear you won’t get all your money back at once. But think of it this way - a payment plan can allow you to maintain a good relationship with your customer, and believe us, it’s better to have a payment plan in place rather than being ignored by your customer. (Which we’ve seen all too often).
First up, communication. It’s really important to discuss what works for both you and your customer, and you can’t decide on anything until you’ve spoken about it with your customer. Be polite but don’t be afraid to ask for the money - it’s your money that you’re owed, so remember that!
Following on from communication, it’s important to be flexible when discussing dates and amounts. If you want your money back in two months, it might not happen. Of course it’s important to ask (they might say yes straight away!), but if they return with a plan that states that you’ll be paid back over three months instead, then be open to that offer. You could always ask for the majority of the money in the first two months, with a smaller amount in the third month.
When setting up a payment plan, aim to get the first amount in your bank account within seven days of the plan being agreed. If you can get the first cheque in your account within a week it shows the client's willingness, and helps you out with your cashflow to boot!
This is vital - it’s a step commonly overlooked with invoicing, and it’s vital to ensure that your customer knows exactly where to pay you. You should include your payment details on your final payment plan. If you make things easy for your customer, they’re more likely to pay you on time.
It may be a given, but it’s important to ensure that everything is written down and sent to both parties to confirm. It’s no use agreeing a payment plan over the phone - if you get it all in writing, your customer has no wriggle room if they try to back out.
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