You're tight on money this month and your conversation with the electric company goes something like this:
“You can’t pay your electric bill this month? No problem. You’ve been a loyal customer for three months now, so just mail us a check when you can.”
What utility company would operate their business with a ‘pay when you can’ standard? It's just not going to happen.
Businesses that succeed have good business practices, including timely collection of payments from clients.
So, if you’re hearing something like this from your clients …
“Oh, sorry. I’ll bring you a check next week. I forgot it.”
“We won’t be here next week, so can you adjust our bill?”
“Would you be willing to barter for [fill in the blank]?”
… you can make some simple changes to get paid consistently and on time – every time!
I guarantee based on years of experience that if you implement these four easy steps into your studio, you will receive only smiles and payments when it's time to get paid — not excuses!
4 easy steps to take to make sure your clients never miss a payment again!
1. Charge a monthly “tuition”.
This was by far one of the most efficient changes I made to my studio policy! By not charging a per lesson or weekly fee, you communicate to your clients that your time is valuable and that you expect consistency. After implementing this change, I had almost no cancellations, absences or no-shows!
2. Have tuition due at the beginning of each month.
When clients pay ahead of time, they are much more likely to follow through on what they’ve already paid for. Wouldn’t you be?!
I used to have students bring their checks to the first lesson of the month. When I moved to using Quickbooks online, I changed my policy to having tuition due by the 1st of every month. Both options have worked well for me.
3. Send an email reminder or an online invoice.
We all benefit from reminders, so don’t hesitate to send each client a brief email a few days before their payment is due. I also used these emails as opportunities to notify parents/students of upcoming events, policy changes, group class schedules, or any other helpful information. (Just be consistent, because you may not receive a payment if you forget to send the email reminder!)
Now that I use Quickbooks online, I send a monthly invoice. Parents and students can pay the invoice online using an electronic check or a credit/debit card (small processing fee). The money gets deposited directly into my account and the bookkeeping connected those transactions is all done automatically. This has saved me many hours of administrative work every month!
4. Clearly communicate your expectations regarding payments.
Everyone appreciates knowing ahead of time what to expect. An opportune time to discuss all of your studio policies is during the initial “Introductory Lesson”. In regards to tuition payment, be sure to specify when, how (cash, check, credit card, online) and the amount of payment required.
What have you done to assure you get paid on time? I'd love to hear your comments or stories below!