How Many Payments to Ask of Your Clients
Is it better to ask for 2 payments from a client? Or, 4 payments?
Typically, wedding pros make this decision based on what they can manage in their workflow. (Asking for payment becomes a nightmare to people who don’t always have simple systems in place.) But – the real question is: what is the impact on your cash flow? If you have cash coming in year round, then it doesn’t matter. But, if you have a slow part of your season, you’ll want to specifically ask for a payment during that slow season.
Here’s an example:
July and August is slow for weddings in hot hot hot Texas. I would recommend that business owners in Texas have 3-payment plans: ask for a retainer/deposit when they book their client, a second payment due July 1st, and a 3rd payment due 2-4 weeks before the wedding.
By scheduling your 2nd payment to occur during slow times you’ll ensure that you have money coming in during an otherwise slow time. There is nothing that says your payments need to follow structured windows of time. WORK your cash flow to YOUR favor. Payments could be set up as such:
A Seattle business that asks for payments on December 1st (slow), February 2nd (slow), and June 1st.
A Florida business that asks for payments on April 1st, July 1st (slow), and September 1st.
A DC business that asks for payments on January 1st (slow), May 1st, and July 1st (slow).
Naturally, you can make exceptions if a client wants to break out the payments into more payments. I’m always a fan of working with the clients’ needs to streamline their cash flow too. They’re likely to book you if you can be flexible with payment plans.
Payments from clients are less a function of your operations and more a function of your finances. When will you need the money? Ask the client for it then.
Need help with your cash flow? Talk to me: michelle@sageweddingpros.com .
Great post! I’m wondering if you think posting that you accept payment plans on your website?
Hi Madelyn! It depends on how you say it on your site. I think that the typical infomercial marketing of ‘payment plans accepted’ may cheapen a brand in our industry. (Tiffany would NEVER advertise this on its jewelry site or marketing material.) I think, however, that placing this information in your process (whether on your site – or in your consultation marketing material) is a good idea so that people feel more comfort in being able to afford a premium service. CHECK OUT how Tiffany does it: http://www.tiffany.com/Expertise/Diamond/Pricing/ (It’s VERY discreet.) 🙂
This is such a great idea! Something I will definitely have to implement into my business plan going forward in 2014! Thank you so much for sharing!
Michelle,
Great post! For my business I used to break it into 3 payments however what I have found for the best interest of my company and my client is doing monthly payments. We have a deposit/retainer up front then I bill the client every month until their last payment which is due about 1 week prior to the wedding. My clients love it because for my larger wedding package it makes the overall cost a little bit less intimidating. Cheers!
This is fantastic, Kelly! I think splitting up these large luxury services up over several months is awesome for the client. It makes it seem like a smaller hit. AND – it’s really helpful for your cash flow also!
I’m an event planner and I have 3 payment instalments although if the lead time is short I reduce, if its over 18 months I increase. I think the key is to be flexible. So normally I take a 40% deposit upon booking, a further 40% 12 weeks before and the balance 2 weeks before. I find it balances out throughout the year. My other big tip is always ensure there is enough in the bank account to pay your salary during the quieter months, i.e don’t splurge it all in the summer thus ending up broke in the autumn!
I also manage clients budgets when asked, paying suppliers using a client account. Recently I had a situation with a stationer where there were 8 invoices/instalments from June-September. Drove me insane! Personally as a planner, and on behalf of clients, I know they prefer just 2 or 3 instalments for payments.
So many great tips! Thanks Bernadette!