When you have clients on credit terms, you leave yourself open to cashflow problems if the client doesn’t pay on time.

One way to counteract this is by offering a discount to customers if they pay within terms. It may seem counterproductive but it may prove to be beneficial financially.

An early settlement discount can encourage invoices to be paid on time, receiving an amount on time, that is slightly less than invoiced, it better than receiving a payment late or no payment at all.

There are some businesses that implement early payment discounts into their pricing structure, whilst the discount that you offer doesn’t need to be huge, usually around 2.5%, it can be enough to persuade a client to pay within terms.

If you are choosing to offer a settlement discount, it is important to make it clear on the invoice to avoid any confusion, make the figure that the client would be saving obvious. If you feel that offering an early payment discount to all clients may be excessive, you may start with clients that regularly miss making payments A discount may give them the push that they need to pay within terms.

If offering discounts sill seems like it will negatively impact your cashflow or you cannot afford to offer discounts at this stage, then you may consider a competition. Enter all clients that pay within a specific time-frame into a competition to receive a discount or free product/service. This can help to build relationships with your clients and may encourage repeat custom.

At Commercial Domestic Investigations, we know how important a positive cashflow is to a business. We offer a variety of services, from credit reporting to invoice collection. Our highly trained account managers will assist you to find the best outcome for your credit requirements. Call us on 08444 159200 or email sales@commercialdomesticinvestigations.co.uk.