I’ll Gladly Pay You Tuesday: A Guide to Payment Plans

Posted by Marilyn Miller on March 18, 2014  /   Posted in Uncategorized

 

wimpy

If you grew up, like me, watching the Saturday mornings Popeye cartoons, you may have wondered if Wimpy ever managed to pay for that burger.

Of course, the Wimpy of today might just whip out his debit or credit card to pay for it, just as many people will pay for your services this year. But, if you are in the business of giving your customers credit, i.e, letting them pay “Tuesday” for services you provide today, then there is one word you must remember when setting up a payment plan, and that word is document.

Document. Document! DOCUMENT!

Memories fail us. It is important to detail of the plan in writing and make sure both parties sign to indicate their agreement:

1. Amount of money to be paid, amount of installments, number of installments (Example: “…will pay the sum of one thousand dollars ($ 1,000 USD), payable in 10 equal installments of 100.00 each)

2. When, where, and how each payment is to be made – exact details. (Example: Payments should be made payable to {Company Name} must be mailed to {Company Name, Full Address} so that payments are received by the 15th of every month.) Also, don’t forget that this agreement should list whether or not interest will accrue on unpaid balance.

3. Consequences for default on agreement – Will default void the agreement? Will you charge a late payment fee? Will the file be sent to a debt collector? Make sure to specifically detail what happens if the terms are not met exactly as agreed. 

There are also several ways you can use payment plans to enhance your cash flow and also make it easier for people to pay you. 

1. Obtain a larger down payment up front with small back end payments.

2. Consider an online payment portal.

3. Set up automatic credit/debit payments, keeping a card on file (VERY important to get a signed consent to use the card in the case of any dispute)

4. Payment coupons – Very old school, but some people like them. Some people like a monthly statement and envelope.

5. Offer an incentive for early payment of balance.

Remember that people are busy. Make it easy for them to pay. Convenience is key!

 

 

 

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