Payment terms and types

[6inall]

Just wondering what others are using for payment terms and what form(s) of payment are generally accepted. I am buying an existing shop and just starting out, career machinist/moldmaker of 20+ years in the trade.

I have noticed some have set terms "net 30" etc. on their invoicing. While other people I deal with don't specify terms. Is it important to call it out on each invoice? Or is it a conversation to have with a new client before taking on the first job?

And at what point do confining payment terms/types cause you to lose business or money?

Is paper check still the main form of payment? Should I be able to accept credit cards? Paypal, etc..?

[underthetire]

I always did net 30, but never said anything till they were past 60 days. If you don't have terms on each invoice, how can you tell them they are late with the check.

[Geof]

You can set whatever terms you want but make sure they are clearly stated on invoices and any forms you send to acknowledge an order.

Probably net 30 is the most common with a penalty of something 1-1/2% per month or part thereof for overdue accounts. The penalty statement could say 'we reserve the right, at our discretion, to charge 1-1/2% per month or part thereof on overdue accounts'.

A handy encourager is to offer a 2% discount on payments made within 10 days.

It is important to keep on top of late payers. After 45 days we will send a reminder to new accounts but for regular customers we may not be so diligent. Past sixty days everyone starts get harassed.

[6inall]

Thank you for the responses, both along the same lines as what i was thinking. I had seen the 2%/10 days thing before and figured net30 was fairly standard. I will be changing up my invoices to cover my bases better.

[flyinchips]

I initially ask for cash on delivery on every thing. My thinking is: I'm a small shop not a bank. If they want terms let them ask. That way I can impress upon them that I'm a small business and count on payment to stay in business. Once terms are agreed upon I will let the account slide to 60 days before going into collection mode.

The other portion of this philosophy is: "Fast payers are first and slow payers are last". I don't, necessarily, tell the customer that directly, but I might say "gee I'm awfully busy now It will have to wait 'till next week. At some point in your relationship, you'll know who's OK on terms and who you needs to put the cash in you hand before you do the job. I have several big name customers that pay extra, because their attitude seems to be "I'm big, I'll pay you when I feel like it" .