Avoid the Financial Pinch with Spread Out Payments
Business Victoria recommends that, “Rather than insisting on payment upfront, businesses should work out how to spread payments over a reasonable time span, ensuring regular cash flow. Customers appreciate spread out payments, and are less likely to default on payment mid-project if terms are more manageable.
As your members and customers come from different walks of life, you should prepare a few spread out payment plans as one man’s lump-sum payment may be another person’s cash-flow nightmare. The idea is to create a flexible spread out payment plan that can provide adequate breathing space so your customers can comfortable make payments as they can afford it. This in return helps your business effectively avoid the pit of cash-flow problems as well.
Spread Out Payments are Better than Asking for a Lump Sum
This is also why we recommend that gyms and fitness clubs offer monthly memberships, as opposed to collecting lump sum amounts (as discussed in #cashflow tip 10). With regular income flowing into your business bank account every month, the prospect of a cash-flow dry spell will be much less likely. Spreading out payments also means that you’ll be able to at least collect a portion of the amount owed from your customers, as opposed to having to repeatedly chase large sums of overdue payments.
Of course, one of our #cashflow tips is about allowing customers flexibility with payments. We see many businesses benefiting from using our direct debit payment solution, Ezypay as well as our membership management software iconnect360 as its dual benefits are cash flow provisioning as well as sales and retention enhancement – both of which are key elements to the success of a business.