I spent the weekend trying to wrap my mind around my final business plan and all my policies. Can those of you it applies to please help me understand the ins and outs of prepaid, contract clients? Here are my questions:

• Do you retro act the discount for a client who might meet the breakpoint? OR Are the discounts ONLY applied to contract, pay in advance clients?
  
• Do you find you have more contract or hourly clients (I'm sure this may vary based on industry but just give me an idea)?
  
• Is there a certain level of contract clients you limit yourself to?
  
• Do your clients shift between discount levels or do they stay the same month to month?
  
• For contract clients who are already receiving a discount do you provide an additional discount for timely payments?
  
• This question would apply to everyone but I didn't want to create a second post just for it...what time of the month do you bill and how frequently?

I know it is a ton of questions for a Monday but my original goal was to have my business plan done by Valentine's Day so I'm asking some tough ones right up front!

Make it a great day!

Sundi

Hi Sundi, these are all really good questions - not all of which apply to my own practice, but I'll answer the ones that do

I *only* work on an hourly basis and don't offer retainers or discounts based on number of hours used - I want to simplify my billing system as much as possible and straight hourly allows me to do that.

I invoice every other Friday on net 14 terms with pretty stringent late payment policies for unpaid at 15 and again at 30. Post 30 are handled on a case by case basis.

While I think it's a nice gesture to offer a discount for payment on time it also kind of opens the door for late payments, which is something I have little tolerance for, as a small business. I think making the assumption that your clients will pay you on time (with failsafes like late penalties in place) helps set the stage for timely payments right from the start.

It's great that you're ironing this all out this week - it's a big step!

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Hi Sundi,

I've been working part-time hours for the past 2 years. (purposely) In that time, I've had one client who paid me an 80 hour per month retainer. I billed him at the end of each month and I did not give him a discount. (for various reasons which I won't get into here) He retained the same 80 hours per month for 18 months until he dissolved his business. I also have another client who buys a pay as you go package. He has limited funds so he always buys 10 hours at at time. He pays this in advance. I do this to make it easy for his budgeting purposes and it doesn't hurt me to do it. Once his 10 hours are used up he buys another 10 hours. I give him a discount. I also have 2 other clients that pay just by the hour. Usually its because they only ever have an hour at time for me to do. In those cases, I bill when the job is done and I don't give a discount.

I am available 4 hours per day. That's the limit I set myself until September when my youngest child is in school full-time. Those 4 hours are for me to work on client contracts or for my own marketing. Then, in September, I will bump up my hours to 6 per day. But, that's my limit and I don't plan on going over it unless there are extenuating circumstances.

Hope that helps.

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Shari Sultana
Online Business Manager (marketing for retail ecommerce)

Forgot to mention: I have a separate rate for subcontracting. I have a VA who subcontracts some work to me and I don't charge her the same as I would a non-VA client. I charge her less.

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Shari Sultana
Online Business Manager (marketing for retail ecommerce)

From my website: Services are billed in 15 minute increments - OR - you may choose to pay a monthly retainer for a prepaid block of time (5, 10, 15 or 20 hours per month) at a 5% discount. If you choose to purchase a block of time, any additional hours are billed at the reduced rate; any unused hours do not carry forward and cannot be redeemed. This option is available to all clients.

If clients choose the hourly rate, I require a $200 deposit when they sign the contracts, which is then applied to the initial work. After that, I bill on the 1st and 16th of each month for the prior 2-week period with a net 15 due date and a stiff penalty for late payments, AND I won't provide further work until I am paid in full.

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Lily Chambers, The Virtual Office Goddess, LLC
Author "How to Do Your Own Small Business Bookkeeping"

Very good questions Sundi!

I'm also working on the details of my pay structure and this has been some very useful information for me.

Thanks all.

These are great questions...

Personally, I invoice on a monthly basis and I do offer discounts to retainer clients paying for 10 hours or more a month. I give a Thanks for the Referral Discount which is always at my discretion to those who refer a paying client. Like Tess, I can't tolerate late payments and I impose a hefty late fee 10% to discourage that practice. In addition I charge a Major Inconvenience Fee for returned checks, which equals to the fee charged by the bank and an additional 10% to cover losses. Needless to say, I don't get any bad checks. (I have not gotten on to PayPal etc.)