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Payment to sole proprietors...

Moze

Active Member
Hoping for some input:

Is it typical for a sole proprietor to request payment sooner than the usual 30-45(+) days that a lot of larger companies take to pay?

I started my business with enough of a financial cushion to make it through slim times. But I'm not independently wealthy by any means. So if I do a job that takes two weeks for example, complete it, invoice them, and then have to wait a month or more for payment - that hurts the wallet.

So for you sole proprietors or you larger companies that deal with sole proprietors, how do you handle this?

Is it the norm to ask for a deposit up front or would that be frowned on?

Are there any other courses of action that can help avoid waiting long periods for payment?

I'm guessing the answer is that I'm pretty much at the mercy of whoever authorizes the processing of payments.

Thoughts?
 

allamericantrade

New Member
I am a sole proprietor and as for me it all depends on certain variables such as the customers track record with payments, The size of the job, and so on. I normally do not require a deposit for most of the accounts that are steady but have done jobs big enough that warrented scheaduled depsits to be made as well.
 

Moze

Active Member
I thought of implementing that, but most of what I bill is "small potatoes" compared to others. If I do a job for $5k for example, and I give them the 2% net 10, they only get $100 off...I wonder if that's really enough incentive for them to pay early...?
 

GypsyGraphics

New Member
No matter who i'm dealing with, the terms are 50% deposit. For most it's balance due upon completion or delivery, but for larger companies i do allow for their billing cycle (within reason).
 

Moze

Active Member
I am a sole proprietor and as for me it all depends on certain variables such as the customers track record with payments, The size of the job, and so on. I normally do not require a deposit for most of the accounts that are steady but have done jobs big enough that warrented scheaduled depsits to be made as well.

So, without prying too much, what determines where you draw the line and charge a deposit? Also, what determines the amount of the deposit you request? (...you personally or you in a general sense, whichever you'd prefer...)


No matter who i'm dealing with, the terms are 50% deposit. For most it's balance due upon completion or delivery, but for larger companies i do allow for their billing cycle (within reason).

What kind of work do you do specifically?

So my assumption would be then that most companies are understanding when it comes to sole proprietors depending on being compensated sooner for work completed...?

Thank you for your comments.
 

allamericantrade

New Member
So, without prying too much, what determines where you draw the line and charge a deposit? Also, what determines the amount of the deposit you request? (...you personally or you in a general sense, whichever you'd prefer...)

I have some major cooperate accounts. One of wich places multiple orders consistantly and I do not require any deposit from them whatsoever. Now with some of the others, If its a repair or a printed or cut vinyl, Usually I don't require a deposit based on their company's track record. If it's a new channel sign, Pylon, or wrap, I do require a 50% deposit. If it's a new customer all together again I require the deposit.
 

sar bossier

New Member
Independent owner, LLC sole member - All invoices UNDER 701.00 must be paid in full in advance of any work. Minimum 50% deposit on all balances OVER 701.00, balance due on completion. Only have 1 company that is the exception, and the terms with them are 2% 10days, net 30.

ALWAYS get money prior to work, that way you don't have a problem (with very few exceptions - see post by Gino for one of the exceptions).
 

binki

New Member
We charge 50% up front and the rest before it walks out the door. Small or big makes no difference to us.
 

anotherdog

New Member
a delicate dance.
most smaller customers payment in full on approval of the proof before production.
If there is a lot of design we will get some time paid for in advance, depends on the existing relationship.

Corporate and Municipal that we have done decent business with before, we will run from 10 days to a month to fit in with thier billing cycle. Most are fine with that. Sometimes we need to chase ones that get a little late. How hard we chase depends on the customer. Some are forgetful so we go softly, the others we need to stop working with anyway.
I find its best to get paid before we fire a customer.
 

Moze

Active Member
Thanks to all of you for your responses.


So for those of you who require a deposit, and who haven't already mentioned it, what services do you provide (vinyl, wraps, sign servicing, etc.)?

I'd like to get a feel of how many of you that charge a deposit are dealing with customers face to face (ie: storefront business) and how many receive business via email/phone/etc. I'm curious if that makes a difference.


Independent owner, LLC sole member - All invoices UNDER 701.00 must be paid in full in advance of any work. Minimum 50% deposit on all balances OVER 701.00, balance due on completion. Only have 1 company that is the exception, and the terms with them are 2% 10days, net 30.

ALWAYS get money prior to work, that way you don't have a problem (with very few exceptions - see post by Gino for one of the exceptions).

Can I ask how you arrived at the $701 as the dividing line?

Can you direct me to the post by Gino that you're referring to?
 

ddarlak

Go Bills!
quit being shy about it. anything you buy you pay for instantly, if that's the way you want it, start demanding it.

accountants never want to part with the money, but if forced - they will....
 

binki

New Member
We had a school come in and want to see the finished product before they paid. We told them 50% down and 50% to pick up. Once they approve artwork it is a done deal. They sent us a check.
 

headfirst

New Member
Thanks to all of you for your responses.


So for those of you who require a deposit, and who haven't already mentioned it, what services do you provide (vinyl, wraps, sign servicing, etc.)?

Screen Print, Vinyl and Dye Sublimation, and small scale installation - wall wraps, etc...

We're a small 3 man shop that started as a 1 man shop.

Terms? Invoices due upon receipt for most customers, 50% upfront for new or smaller customers and for most screen printing orders.

We have a handful of retail customers on net 30, a couple on net 15 and one net 45. We don't offer terms, you have to request it and have a good track record with us. It's not something new customers get.

For wholesale accounts we'll do net 15 on a credit application and an ASI number after the third order.

That net-45 customer above? They pay closer to 60, but they always pay. They do 3 jobs a year with me (for going on 3 years now), they aren't local and we aren't the cheapest. I've long suspected that we get the job because we can float the invoice for two months and their local vendors cannot.

Its not the right answer for everyone, but if you get a large order from a customer that needs terms you could always look into receivable financing. We get stuff in the mail from these companies from time to time.

Good luck!
 

GypsyGraphics

New Member
"What kind of work do you do specifically?
So my assumption would be then that most companies are understanding when it comes to sole proprietors depending on being compensated sooner for work completed...?"


I do more design and layout work (corporate identities, brochures... printed collateral) than sign work. The majority of my sign jobs come from the client base i've built over the past 15 years.

As for being a sole proprietor, it has little (and maybe nothing) to do with how i bill clients. It just took me a year or so to figure out, NOT having stead fast policies was a frigg'n nightmare. I'm NOT good at chasing people down for money, i fall for every sob story and even feel bad for people who couldn't pay their bill and i suck big time at keeping track of accounting that isn't straight forward and tidy. So, out of necessity... I'm VERY clear with people when explaining my billing process. It's 50% down, when the check arrives, i review my schedule and call to let them know when i can start their project. If they have a committee or board that has to review my quote and it takes them 30, 60 or 90 days to get approval to cut a check... so be it. But the job doesn't go on my schedule till the check arrives. So, if they're in any kind of hurry, they better kinda hurry with the check.

Even with business being slow right now... i still won't tell someone their job can start right away... becuase i don't temporarily change my polices. I'd rather start a job sooner than expected and finish early than have a client say " but LAST time you bla bla bla."

I can't think of any product or service i purchase where i walk out the door with the item or having used their services and pay for it a month or more later. However, those same clients that take 30 days to cut the deposit check usually need 30 days to pay the balance as well. And if i want their business, those are the term i agree to.
 

704signs

New Member
I know what you are dealing with, I do the same type of work you do (subcontract installs) I have one company that cant or wont pay on time (90+ days). I now make them pay in full and 1/2 deposit before I do an install for them. I also make sure I bid a higher price on jobs for them to try and make it worth the hassle.
 
If you don't already take credit cards, we've had good luck with PAYPAL, then you can say

for the 50% deposit, which is more convenient for you a check or credit card?

A nice assumptive close, either way you win.
 

CentralSigns

New Member
Anything your waiting 90 days for, and they wait to the limit you are losing money on. What percentage interest do your suppliers charge over 30 days. I bet it's credit card rates. If it is your losing that with every late payer. We do anything over $200 is 75% deposit, then everything else is due at 7 days or there are service charges. $20 admin fee on late accounts and 2 % per month which is 24% per year. Large companies use your money for 90 days to collect the interest on it, and only pay when there are penalties looming.

We have a couple exceptions to the rule but they are the companies that order several times a month or more. We have a special arrangement with them allowing them 30 days instead of 7. They pay before the 30 days every time guaranteed. I guess that is why we have a arrangement with them.

Think of it this way would you give someone off the street $100 to look after for you for 90 days. Can you go to a restaurant and pay for your meal 30 days from now. Does your clothing store allow you to wear the shirt or jeans you bought for 90 days before you pay. Probably not.

Until you make changes you will always be struggling with this. We decided to change out policy after dealing with $15000 in AR's over and over again, month after month. We missed our bills and the big companies waited till 90 days to pay. We were always wondering when our clients would pay and always at the end of the line with our suppliers as well. We had to turn down work cause be didn't have any more room to purchase materials, or be able to complete work we had taken till we got paid. There was a huge risk that we might not get paid. Lending is for banks they have better screening processes for their clients. Let the banks carry the risk.
 
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