Your Next 4 Steps to Getting Paid Upfront in Full - Pt. 2
etting paid reliably and consistently is the key to your business success. We’ve discussed just how important this is and how this benefits you in time and profits. In part two of our coverage on getting paid upfront, we’re looking at how you make that happen. (If you missed “Get Your Payments Upfront in 2022,” read it here.)
We can’t stress this enough: It’s a much smarter business practice to require 100% upfront payment from all customers, even if some walk away. “You can’t go to Amazon, Walmart, Target and many other places without paying upfront, and especially not for a custom order,” says Tanya Doyscher, co-owner and graphic designer at The Visual Identity Vault. “Before we required upfront payment, it created such cash-flow issues for us and stress beyond belief, Doyscher says.
"We decided we’re not risking our cash flow for slow payers anymore.”
- Tanya Doyscher, co-owner at The Visual Identity Vault
Similarly at Strikke Knits Embroidery, owner Carolyn Cagle decided to switch to 100% upfront payments after often chasing customers for three months just to get the customer to pick up their order and pay the balance. “Plus, I always had to front the costs of the blanks and supplies upfront, which drains my funds,” she says. “You share risk and trust between your shop and your customer.”
Rowboat Creative also set the policy of getting paid upfront. “Our clients have never pushed back because we set the bar high and they understand the caliber of service we provide,” says Lucas Guariglia, CEO and co-founder. “We do a great job at being clear on expectations and terms," he says.
"In the end, you must protect your shop at all costs. Floating a client the cash has very few upsides. You’re not a bank.”
- Lucas Guariglia, CEO and co-founder at Rowboat Creative
Get in the Right ‘Cash Flow’ Mindset
Ultimately, you need to get into the mindset of not being afraid to enforce your upfront payment terms. “Shop owners think they can’t get paid upfront,” says Marshall Atkinson, business consultant at Shirt Lab Tribe and Atkinson Consulting. “We all pay for things upfront. Your customers will adjust. If they won’t, lose them. They’re not your customers. Good customers pay you upfront.”
"We all pay for things upfront. Your customers will adjust. If they won’t, lose them. They’re not your customers. Good customers pay you upfront.”
- Marshall Atkinson, business consultant at Shirt Lab Tribe and Atkinson Consulting
“In this day in age, it just makes sense to collect payment up front,” Doyscher says. “Our geographic territory is limitless now, so that can play a huge role in shifting your policies. It isn’t just about ‘Bob’ coming over from across the street to place an order on a handshake. We often never meet our customers face to face now, unless we’re seeing them over a screen.”
Here Are Four Steps to Getting Paid Upfront
It can be uncomfortable at first asking for full payment before you’ve delivered the goods. The four steps below will help you feel confident asking for and expecting payment upfront.
1. Update your terms of service.
One of the easiest ways to get paid upfront is simply to change your terms of service that your customers sign when they place an order with you.
“Terms of service are often a place on their websites where decorating companies fail miserably,” says Kristine Shreve, director of marketing and outreach at Applique Getaway. “This is your first line of defense for your shop and the place where you explain and outline your policies. Terms of service are also what you’ll reference if a situation arises where someone doesn't pay as agreed or expected.”
So, if you don’t already have terms of service, or haven’t updated your new policies in a while, do that first – as in right now. Here are the most typical options that are given to customers, which we’ve listed below, from the least ideal to the most ideal:
- Net 30: Your client must pay their entire bill within 30 days of receiving their decorated garments (with penalties and fees outlined for late payment).
- Net 15: Your client must pay their entire bill within 15 days of receiving their decorated garments (with penalties and fees outlined for late payment).
- 50/50: Your client pays 50% of the bill upfront and 50% once you’ve delivered the decorated goods.
- Upfront Payment: Your client pays 100% of the bill at the time they place their order. This eliminates the need for a fee or penalty schedule. Plus, you don’t front the costs for supplies or labor, while you’re waiting for a client to pay the balance.
“When you’re writing your terms, make sure you’ve spelled them out clearly, in an easy-to-understand language that’s simple to read,” Shreve says.
“Don't throw out tons of legalese, since it’ll only confuse your customers and do less to protect you should a problem arise."
- Kristine Shreve, director of marketing and outreach at Applique Getaway
"Just state, clearly and concisely, what your policies regarding payment are, and then adhere to those policies and expectations,” she says. Remember, your shop isn’t a bank. “When someone doesn’t pay or only pays 50% you’re floating them money until they pay, so what if they don’t pay?” Atkinson says. “When you take upfront payment, your shop’s financial strength and cash flow is so strong.”
2. Provide a written proposal.
If your client is placing a large order, chances are they’re going to compare quotes to several different vendors. As such, you’ll probably include a written proposal or estimate of your work to the client upfront.
In your terms, add in that you won’t start the job (including ordering blanks or conceptualizing artwork) until you receive payment in full. That means, if the customer waits to pay, their desired in-hands date might be affected.
“On quotes and proposals, you can easily list your terms as a simple sentence or two detailing how and when you expect to be paid for the job,” says Shreve, who also recommends posting terms of service on your website and at your online checkout station, to reinforce them in your customer’s mind. “The more times you reference your payment terms, the more likely your customer will notice and adhere to them.”
3. Provide regular updates.
Provide consistent updates to your clients about the status of their order so they feel confident paying you upfront. This is where having a solid production workflow system in place keeps everything on track. You can put a refund or “goodwill” policy in place if a deadline snafu does occur, so they feel like they’ve got a guarantee or top-shelf service.
“Communication is so vital, particularly in today's business climate where COVID-19 can turn things upside down overnight,”
- Kristine Shreve, director of marketing and outreach at Applique Getaway
“So communicate with your customers clearly, more often than not. Let them know exactly where their job is in the production flow. If there are any issues, make sure you let your customer know, and how you’re dealing with them. Customers don't like to be blindsided by a problem that you hid until it was unavoidable.”
Remember, include all of these terms—the payment deadline, the milestone updates schedule, and the refund policy—in the original proposal and the contract that you both sign when they place their order. Let them know that you won’t start their job, including ordering blanks or materials, until they pay in full.
4. Make it ultra-easy to pay you.
First, switch to electronic invoices and billing. For example, a platform like ReliaBills lets you email invoices, send payment reminders and get paid online, before you start the job. You should also offer a variety of payment options. Credit cards are one method, but you can also include online platforms such as PayPal and Zelle. This not only shows your professionalism and flexibility, but also reassurance, as these online payment options have buyer protection programs.
Shreve advises not charging an overt credit card fee. “That’s old school,” she says. “If you need to pass that charge onto your client, roll it into the fee for their products. Don’t call out to customers that they’re paying for it.” Similarly, Atkinson recommends not adding on shipping charges as a line item. “Make it frictionless,” he says.
“Work the cost of shipping into the cost of the shirts that you quote.”
- Marshall Atkinson, business consultant at Shirt Lab Tribe and Atkinson Consulting
If a client wants to pay with a check or cash, you can choose to accommodate those methods, if needed. “However, there are enough options these days that you shouldn’t have to rely on face-to-face payments,” Shreve says.
Be So Valuable to Your Clients, That They’re Glad to Pay You Upfront
The biggest action you can take to ensure business and get paid upfront in full is to become so important to your customers that they can’t be without you or your products. Don’t think of yourself as a garment-shop operator. Instead, you’re a problem solver who’ll bring in business because you can truly help your clients.
“By providing such an overwhelming amount of service, your client can’t help but use you,” Atkinson says. “For example, when was the last time you brought ideas to customers so they could use them and increase their sales?”
If you don’t wait on the customer to come to you, but instead actively help them with their products, you’ll be sure to be seen as a vital part of their business. Here are other ways to become valuable to your customers:
- Improve your customer’s business with your product or services.
- Save time for your customers.
- Ease their fears and anxieties about doing business with you.
- Have fun with them by being personable and friendly.
- Make it easier for them to connect with their customers.
- Anticipate their needs and surprise them with products that will help them.
If you want to get paid upfront, it’s important that you set ground rules with your customers. All of this is about relationship building which will go a long way with your prospective customers.
“Let clients walk away if they don’t respect your business practices,” Guariglia says. “If they go to a lesser competitor, they’ll be back when they don’t receive the service you offer if it’s top notch.”
