Advice on invoicing
I need some advice about invoices. I run a student newspaper and we sell advertising in order to keep it going.
However, our policy is to ask clients to pay before the advert is included for 2 main reasons:
1. Because of the amount involved in getting the paper printed and distributed, we could face a cash flow problem until the clients pay.
2. As a deterrent, so that clients don't cancel at the last minute (which has happened to me before).
The two main concerns they have raised is:
1. My terms are only 15 days instead of the 30 days ("most of our suppliers offer 30 days, so you should too" - that's what I hear all the time).
2. They only want to pay after the advert has been printed.
So, I was wondering if anyone could give me some advice on what to do? Obviously, I would like to keep the terms as they are and ask clients to pay before the advert is included, but does this mean we look 'bad' to clients we are trying to keep hold of?
However, our policy is to ask clients to pay before the advert is included for 2 main reasons:
1. Because of the amount involved in getting the paper printed and distributed, we could face a cash flow problem until the clients pay.
2. As a deterrent, so that clients don't cancel at the last minute (which has happened to me before).
The two main concerns they have raised is:
1. My terms are only 15 days instead of the 30 days ("most of our suppliers offer 30 days, so you should too" - that's what I hear all the time).
2. They only want to pay after the advert has been printed.
So, I was wondering if anyone could give me some advice on what to do? Obviously, I would like to keep the terms as they are and ask clients to pay before the advert is included, but does this mean we look 'bad' to clients we are trying to keep hold of?
Asked by Francisco Esteves,
January 2008 - Contact this person
4 Answers
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Hi Francisco,
I can understand that cash flow is a problem and getting your first issue out without advertising revenue was, I imagine a bit of struggle! However, you should be able to get yourself into a position where last months ad revenue funds the next issue and thing will gradually get easier.
Make sure that you publish closing dates for advertising to be submitted and make it clear in the order form or contract that any ads cancelled beyond this date will be invoiced, possibly with an administration or cancellation fee for the trouble. This should act as a suitable deterrent for advertisers cancelling.
One of the things you might think about doing is asking new advertisers for payment upfront for the first order. If they pay-up on time, you can establish they are prompt payers and you can then offer then standard 30 day terms.
Another alternative that is quite common is to place a direct debit mandate on the order form or request card details – you can then debit accounts on the day that the adverts are published. You are then not at the mercy of accounts departments waiting till the 11th hour to pay.
In terms of knowing where you are financially, a good plan is to get advertisers to commit to a schedule over a 3 month or 6 month period (or set number of issues) in return for discount. This way you have a better idea of where you are going to be cash wise at any given point.
Hope some of this helps. Ask away if any of this needs clarifying…
Phin -
The problem with selling advertising is that once it has appeared it can be extremely difficult to get the monmey in. We have a product that we sell on a cash with order basis. Frankly I don't care what other companies say: if you want this product we have to have payment before you can have it.
Have you tried calling local newspapers to find out what their payment terms are? Chances are that for new clients it wil be cash with order. -
all papers i have advertised with have required payment upfront.
only after i have built a relationship with them have they allowed me to open account.
i would request money up front. after they have advertised with you a few times maybe you could offer them some terms for an account. -
I agree with the last two answers.
When you have a new customer, you ask them to pay upfront. Once they become a repeat customer, you give them a credit line and they can pay later.
Tell them that even Google operates in this way.
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