Advance payment, a Policy We Apply in the Ordering Process
Advance payment means a customer makes a partial payment of the cost of the goods or services before we begin the production process. It’s the same as a deposit or prepayment made either in cash or by cheque on a job to be done. Goleza Designers adopted this advance payment policy to streamline our operations and prevent total loss caused by nonpayment.
Most of our clients fail to understand us when we ask for a deposit before we start working on any job. For that reason, we thought it prudent to educate our prospective customers. And it’s the reason why we are sharing this blog post with you.
Why do we charge Advance Payment?
There are 2 main reasons why we require our customers to make an advance payment before we do any job. They include:
♣ Protection against nonpayment
♣ Cash flow management
Protection Against Nonpayment
Our number 1 reason is to protect ourselves against nonpayment in case the customer does not turn up to pay at the time of delivery. On several occasions, we received orders, worked on them to completion and the clients failed to pick the items. In most cases, they are individuals who need one or two products.
In such incidences, we lost a lot of money. But when customers deposit some money on the jobs, we are to a great extent sure that they will pay the remaining balance upon delivery of the goods or services because they have committed themselves.
One thing our customers should know is that we are in business to make profits but not losses. When we make profits, the benefits do not only come to us, but they also go to the government because we pay taxes. Not only that, the society in which we live also benefits through our corporate social responsibility. It’s, therefore, essential for us to avoid incidences of loss caused by customers’ nonpayment. And we do this by way of making it a requirement for every customer to make an advance payment at the time of ordering a product or service.
Advance Payment help us in our Cashflow Management
As jobs come in from time to time, it’s possible to fall short of cash flow to fulfil the orders if we don’t put in place effective measures. Goleza Designers Ltd is not a trading company, but it’s more of a manufacturing business enterprise because we make products like awards, wedding cards, signage and much more.
The products we make require us to buy materials to make them. Advance payments enable us to purchase these materials from our suppliers to continue serving our esteemed clients without falling short of cashflow.
When customers commit themselves by paying in advance some money for the products or services they want, they cover partly the cost of making the items. In case they fail to fully pay after completion of the job, we do not lose.
Who is required to make advance payment?
In principle, we expect all customers to make an advance payment of not less than 45% as they confirm their orders. The only clients whom we don’t require to deposit some money before the execution of the job are organisations, companies and government institutions that have prequalified us as their service providers. They only give us a Local Purchase Order (LPO) and pay after the delivery of the goods or services.
To protect our business against nonpayment by customers and to effectively manage our cash flow, Goleza Designers adopted the advance payment policy. We, therefore, appeal to all our potential customers to understand us so that we can continue serving them.
Hello! My name is Charles Kiyimba, a creative engraver, a professional teacher, a passionate blogger, a confident graphic/web designer and the founder of Goleza Designers Ltd, an engraving business that turns images into real products. Through my hands-on experience, I share with you free helpful information on our products and services, business, marketing and personal development. Always dive in for more!