How to set up a Payment Plan - a guide from itsettled
29th January 2021
One question we get asked a lot here at itsettled is “My customer wants to set up a payment plan, what do I do?!”
We know that it can be intimidating to set out a payment plan - and it can be frustrating to hear you won’t get all your money back at once. But think of it this way - a payment plan can allow you to maintain a good relationship with your customer, and believe us, it’s better to have a payment plan in place rather than being ignored by your customer. (Which we’ve seen all too often).
So, we thought we’d share our top tips for setting up a payment plan that works for both you and your customer.
- Communication is key. First up, communication. It’s really important to discuss what works for both you and your customer, and you can’t decide on anything until you’ve spoken about it with your customer. Be polite but don’t be afraid to ask for the money - it’s your money that you’re owed, so remember that!
- Be flexible. Following on from communication, it’s important to be flexible when discussing dates and amounts. If you want your money back in two months, it might not happen. Of course it’s important to ask (they might say yes straight away!), but if they return with a plan that states that you’ll be paid back over three months instead, then be open to that offer. You could always ask for the majority of the money in the first two months, with a smaller amount in the third month.
- Get the first amount of money ASAP. When setting up a payment plan, aim to get the first amount in your bank account within seven days of the plan being agreed. If you can get the first cheque in your account within a week it shows the client's willingness, and helps you out with your cashflow to boot!
- Be sure that the customer has the right information to pay you with. This is vital - it’s a step commonly overlooked with invoicing, and it’s vital to ensure that your customer knows exactly where to pay you. You should include your payment details on your final payment plan. If you make things easy for your customer, they’re more likely to pay you on time.
- Get everything in writing. It may be a given, but it’s important to ensure that everything is written down and sent to both parties to confirm. It’s no use agreeing a payment plan over the phone - if you get it all in writing, your customer has no wriggle room if they try to back out.
We hope these tips were helpful, and if you’re still not signed up with us at itsettled, why not?! Itsettled is the first of its kind in the UK and we’re great at what we do - that’s why we offer everyone their first invoice free. We provide an automated credit control app, which is quick and easy to use. If you have accountancy software, even better, as you can integrate it with itsettled, allowing you to sit back and relax!
To find out more about the itsettled service available to chamber members click here.