How do you ask clients to pay for your products and services?
Perhaps more importantly, when do you ask them for payment?
A common issue for micro business owners is the feeling that we need to ‘prove’ ourselves to a client with good work before we ask them for money.
But if we look at the way larger companies work with payments, we soon see that charging upfront is common, unthinking practice.
For example, you had to pay for your weekly shop before you left the supermarket. And unfortunately, we don’t get to find out whether or not we enjoyed a holiday before we’re asked to settle the bill.
The reason large businesses charge their customers upfront is simple: they want to ensure they’re paid. They don’t send out invoice after invoice, crossing their fingers that they will receive the money in time to pay their bills.
Here’s an example: I worked with an absolutely gorgeous client – a hairdresser – who treated, cut and coloured her client’s hair, then sent them on their merry way with her bank account number and sort code, leaving the client to make their payment in their own time. And, believe me, some of them took an awfully long time!
You may be thinking that large companies can ask for their payment upfront because, for the most part, their customers already know who they are. They have built up the trust needed for people to feel they can part with their money and receive a product that works, or helpful service that makes them smile.
But those companies all had to start somewhere!
So, if you want to improve your micro business cash flow, and start spending money you have actually made, here are some simple methods you can start working into your payment strategy.
So, how did my hairdressing client make asking for money easier in her business? Very simple, she started using a Square payment device (my favourite payment device, by far). This meant payment was made at the time of service delivery. But there was a knock-on effect too. Because clients were paying there and then, with a card, they made additional purchases too – shampoos, conditioners, styling products etc.
Start Moving from FREE to ‘Complimentary’
Be honest: whenever you’re offered something for nothing, how much do you really value it?
Bear in mind that if you offer anything for free, people may then question paying for it later on – even if that feeling is completely subconscious.
Rather than providing your usual products or services free of charge, you could instead create an enticing sample to offer potential customers, as a complimentary, bite-sized ‘taster’.
As an example, I often offer a complimentary, half-hour Breakthrough Session on my website, in my blogs and at the end of my workshops. This helps to demonstrate what business mentoring is, how I work, but it’s also useful for people to see if we might work well together.
If we don’t hit it off, it’s much better to discover that during a short, ‘complimentary’ session, than further down the line. But if we do hit it off, that customer will feel much happier about paying upfront for more sessions later on.
It doesn’t matter if you are a service or a product business, there is always a complimentary ‘something’ that you can offer potential clients as a first step in converting them to paying customers.
Make Sure You’re Clear About Your Complimentary Offer
Don’t forget, potential customers need to know what to expect when they take you up on your offer. You’ll also need to make them aware that part of the deal involves an opportunity for you to explain how they could purchase from you in future.
Part of this involves not giving away too much.
If you give away all your best samples, advice and tips for free, why would people need to buy from you at all?
So, be clear. Ask those taking up your offer whether or not they liked it, and if they’d like more from you. If they do, tell them how much it costs.
(Remember, some will say no, and some will say yes. Forget the first group and focus on turning the second into loyal customers).
Create an Expectation of Payment
If your micro business doesn’t have a set of terms and conditions, it’s time to start creating some.
Your Ts and Cs not only outline rights and responsibilities for both you and your clients; they also specify your payment processes.
In other words, your Ts and Cs create an expectation of payment – what, when and how.
If you are a service-based business, you should ask each client to read and sign a Clients Agreement or Letter of Engagement. This document will outline your terms, including your payment processes.
While this won’t prevent people from stopping payment, it creates a professional structure to your working relationship and provides documentary evidence in case you need to take non-payment claims further.
Ask for Up-Front Payment
While you may feel uncomfortable asking your customer for payment before you complete their work, there may be some jobs that will run over a period of time, or involve you purchasing something especially to do that work.
In these circumstances, I suggest a 50/50 split; they pay 50% of the cost up-front, and the remainder on completion of the work.
For larger jobs, you could also think about offering payment plans over a number of weeks or months. I use a system called GoCardless, which takes a tiny percentage of the payment to handle the transaction. Quite honestly, I would rather pay that percentage, than risk losing a client!
So, how and when do you ask your customers for payment? Do you find it difficult? Do you get a dry mouth or butterflies? Have you learned techniques that make asking for money easier? I would love to know, so please comment below.
If you’d prefer a more in-depth conversation about making money, and taking money, in your business book a Breakthrough Session and let’s have a conversation.