Late payments from clients are inescapable in businesses. In such cases, you can extend an invoice for partial payment. This is a percentage of the entire amount owed by you. This might be agreed on before signing a deal with the client. You can also ask the client for partial payments later when they have missed the due date. Read more to find out why partial payment is important for Global Business Expansion and how to ask for it.
Clients’ Reasons For Making A Partial Payment
Certain firms generate an invoice stating a partial payment in advance. Commercial collection agencies often suggest this strategy to organizations. This ensures that the remaining sum will be paid late. It also helps to maintain a regular cash flow in businesses.
In the case of long-term contractual projects, asking for partial payment is quite common. The final amount for such projects might exceed the pre-estimated figures. Therefore, partial payment allows for covering the organization’s expenditure and additional costs. Real estate buyers often pay a certain percentage as a down payment and the rest is paid in installments.
Companies often prefer partial payments during mergers or takeovers. The buying party considers it as insurance for the unpredictable future. Some terms are not fully disclosed in agreements. If that impacts the takeover in any case, the partial payment will serve as indemnity for the buyer.
Expenditure During The Project
A business will not use its savings to begin a project. The client’s initial payment will ensure the purchase of software or other items to be used in the project. If you have partial payment, you will have the money to start the project without delay. Besides, it assures productivity and dedication in work.
Offers Flexibility In Business
Paying the entire amount at once might be difficult, especially for struggling organizations. If you are already in business with any such organizations, partial payment can be helpful. Clients often fail to pay the entire amount due to several reasons.
Misapprehending the final figure, downfall in business, etc are a few reasons behind your client’s inability to pay on time. Partial payments are the best in such a regard. You can provide a flexible payment schedule for your client and continue smoothly with your business.
How To Ask For Partial Payment From Your Client?
At the beginning of a contract with new clients, ask for partial payment as an advance. For jobs with a fixed cost, businesses can easily ask for an advance partial payment as an assurance. Business debt collection agencies such as Nelson Cooper & Ortiz, LLC even confirm the benefits of partial payment. An early deposit will boost the company’s performance and will act as a guarantee that money will be paid. Given below are a few ways in which you can request partial payment from clients:
Realize The Extensiveness Of The Work
To ask for partial payment, you will have to understand the specifications. What is the client’s expectation? How much work is involved? How long will the project be? Once you have answers to all these queries, it will be easier to estimate the cost.
Discuss Partial Payment With The Client
Before signing an agreement with a client, request a certain amount of partial payment. Debt recovery services recommend transparency from the beginning. Make sure you mention the partial payment in the contract. This will clear any doubts or misunderstandings from both ends. Generally, 25% – 50% of the entire amount is charged as partial payment.
Send Invoice Along With Business Contract
Since you have already discussed the issue of partial payment with the client, send it with the invoice. As soon as the deposit gets credited, you can start the project. Make sure to send a receipt to the client for the payment made
Give Regular Updates
If you are involved in long-term business with a client, make sure you send regular updates on the progress of the assignment. This is one of the best techniques to acquire partial payment from clients. When progress is visible, clients will naturally be satisfied.
Hence, they would be willing to pay you for getting the work done. It is extremely crucial for clients that are important to your business and is also a good habit to adopt. Now, you can discard your worries about a non-paying client. Besides, as the old saying goes – something is better than nothing.
Businesses should not hesitate to ask for partial payments. Even with old clients, you can initiate partial payments while renewing the contract with them. However, make sure you have thoroughly discussed the issue with them before asking for it.
Summary – Clients who are late in payments can be offered a partial payment option as an alternative. This will help you get at least a percentage of the payment and bring a financial boost to your organization.