Discount for Timely Payment
First I have always listed on my quotes very clearly this language:
Finding most purchasing agents were willing to agree to my terms, once completed, the process was really out of their hands and accounts payables had their marching orders and payment was received when they felt like sending it. The typical discount offered by companies written as a 1% figure I knew never worked, as companies pay late and take the discount anyway.
This is what I do: I write the quote adding an additional 15 - 20% to the dollar amount on all the items. The final total column shows an asterisk. Then clearly shown like in bold, not fine print buried, I write the following:
*NOTE: If payment is received by (Your Company Name), by Invoice Due Date, (Your Clients Name), may deduct $XXXX.00 from Total due.
I make the number big on purpose and specified in dollars not percentage.
Example: A $7,500.00 total job would have 15% added and actually be quoted as a Total $8,625.00* This is carried through from first quote to final invoice.
Then the discount amount would be specifically written as $1,125.00. Accounts Payable departments are almost always under orders to prioritize payments which have a discount provided. My invoices got moved to the top of the pile and receipt of receivables stopped being a problem. The buyer knew the real cost was less and I don't think I have ever lost a bid due to any confusion. The purchasing agent wanted to pay me on my terms but had no control until I did this.
Any client who doesn't understand this might not be a client you want to do business with anyway. And any client who squirms is a sure sign that they are used to playing unfairly with their contract final payments. For whatever it's worth, that's my tried and true tip. Does anyone have any tips?
From contributor D:
The only thing that I would worry about is what you already touched on, having a purchasing agent that compares your each price to the competitions and doesn't factor in the discount. If everybody in an industry/niche followed similar terms then you wouldn't have much to worry about.
Would you like to add information to this article?
Interested in writing or submitting an article?
Have a question about this article?
Have you reviewed the related Knowledge Base areas below?