One of the best things you can do for your business, cash flow and yourself is to get your customers on some form of automatic payment plan. Some people are afraid to implement this type of system because they believe that their clients will not go for it. I can tell you from over 31 years of experience that it is one of the best things that we did to help our cash flow and it also helped us keep our peace of mind. We implemented it 15 years ago and have eliminated the problems that we had with our clients regarding billing and payments.
We decided that we needed to make a change when we had a very unfortunate situation with one customer. This person had two children taking many classes with us. The account started to get behind and before we knew it she owed us $1200.00 with less than three weeks left in the semester. We always had the policy that if you had an outstanding balance we held the child's costumes until the final payment was made. Both of these children were in quite a few numbers in the show so we knew that if the balance was not paid and we didn't let them participate it would just be another problem for us. The biggest factor was that we really didn't want to put the children in the middle of a situation caused by the parents' lack of communication regarding their financial situation, we certainly did not want there to be any bad feeling on either side. The mom was always the kind that would pay but she usually showed up at the last minute with the cash. On this particular occasion she ended up having a meltdown in our office and blaming us for letting her get behind with her payments. She was very angry and it was steadily becoming an ugly situation so we assured her that we would not stop her kids from dancing in the year end show. To cut a long story short she ended up paying us on the night of the showcase but it was an extremely uncomfortable situation and as a result, even though we had let her children participate in the show, she did not return the next season.
In a way we were glad that she did not return despite the loss of revenue because we felt that she would probably act the same way again and we really didn't feel that we needed that kind of aggravation. As is usually the case we, as studio owners are made out to be the bad guys in a situation that is usually not our fault. After much thought we realized that some of the issues we had with our customers were caused by us trying to get them to pay their bills on time. We ended up spending so much time and money on sending out invoices and it seemed that we were constantly on the phone reminding them that their payments were past due. So we created a new policy for payment plans.
Today, the only way our clients can have one is if they leave their credit card on file. They can decide whether they would like their payment to be automatically deducted on the first or the fifteenth of the month. If they want to pay by check or cash they must come in the day before their payment is due or their card will be charged. We have our front desk staff punch in the numbers and the money is in our account in a couple of days. The way we positioned it for them was that it would alleviate the stress of having to worry whether or not they were late with their payments and it would also make it more convenient for them and in turn for us. For us it has been a real money saver. No more taking time to send out bills, no more postage, no more wondering when the money was coming in. Since we implemented this new system we have eliminated all payment worries.
We have now moved on to an automatic payment system with an outside company but this was a terrific way to eliminate headaches. With the exception of one or two people everyone has been relieved that we have taken the burden off their shoulders and all they have to do is pay the credit card company and if you already accept credit cards there is no setup at all. Just create a form and you are set! Check out the downloadable form in the Templates and Forms Area of the Website to see a copy of our payment agreement. Some people may balk at it but the idea is to show them that it is in their best interest and will save them time. Time is the most valuable commodity that we all have.