Tried offering a 2% early payment discount and got way more than I bargained for

I run a small landscaping business in Columbus. Last month I was tired of waiting 45 days for checks so I offered clients 2% off if they paid within 10 days. Figured maybe a few would take it. Instead like 80% of my invoices got paid early. I wasn't ready for the cash flow hit. Had to borrow a bit to cover payroll that week. Learned next time I'll offer 1% or cap how many can use it. Anyone else try this and get burned by people actually paying too fast?

3 comments

3 Comments

kai83913d ago

Oh man @ryan_hart38 that's brutal. Honestly I feel like people treat early payment discounts like a free lottery ticket. Ngl I offered 2% once on a $3,500 invoice and someone paid in two days. I had to borrow for payroll too. It's a trap if you're not ready for it. You gotta set a cap or just stick with 1%.

anna71712d ago

Yeah @kai839 hit it, but nobody talks about how early payments mess up your tax timing.

ryan_hart3813d ago

Man I feel this so hard. I run a small HVAC outfit in Dayton and did the exact same thing last summer with a 2% discount. Thought it would be a nice gesture for a few loyal customers who always paid on time. Instead I had like 60% of my residential clients paying within a week and I was scrambling to cover parts orders. The worst part was one guy who paid his $4,200 invoice in like 3 days and I had to turn down a big commercial job because I didn't have the cash flow to buy the equipment. It's wild how people will jump on a tiny discount if they can.