I find that most clients are eager to take advantage of discounts. Years ago, a client was in financial trouble, and it took more than a year to receive payment. I offered the client a discount if they paid in cash within 15 days, and they took me up on it. I chided myself for waiting so long to offer the discount.
During these worrisome economic times, it may be wise to offer clients a discount if they pay in cash. On one hand, IT pros are in a fortunate position because clients aren't going to stop using their computers and networks. However, you'd feel the pinch if even one of your consulting clients went out of business or if a few clients had to cancel (or substantially reduce) their monthly on-demand maintenance contracts.
An easy way to help balance some of these changes is to persuade your clients not to charge your fees. Depending on your setup, you could be paying 1.5 % to 4% in fees. When you add in the monthly fee you incur if you don't meet the minimum, the money adds up.
Most likely, clients will need some incentive to pay cash. If you offer a discount for cash payments made within a specific number of days, it could go a long way. For example, a charging client whose fee is $300 with a credit merchant fee of 3.5% nets you $289.50. So, it winds up costing you $10.50 to do business with this client. By offering this client a 1.75% discount for a cash payment, it lets you split that fee, and both you and the client save a little money. Instead of receiving $300 and paying the credit merchant $10.50, you receive a payment of $294.75, saving you $5.25. Your client pays $294.75 instead of $300.00.
While that isn't much money, but if enough clients use the discount, those small fees could add up to sizeable savings. I'm certainly not suggesting that you start to refuse credit payments; I just think it can't hurt to try the discount option for a few months and see what happens. Remember to make the offer clear on your invoice with verbiage such as THIS DISCOUNT NOT VALID WITH CREDIT PAYMENTS.
Susan Sales Harkins is an IT consultant, specializing in desktop solutions. Previously, she was editor in chief for The Cobb Group, the world's largest publisher of technical journals.