Advance payment means a customer makes a partial payment of the cost of the goods or services before we begin the production process. It is a deposit or prepayment you make in cash or by cheque on a job you want someone to do for you. 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 two 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 if the customer does not turn up to pay on delivery. On several occasions, we received orders and worked on them to completion. But 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.
We are in business to make profits, not losses. That is one aspect that our customers should understand. When we make profits, the benefits do not only go to us; they also go to the government because we pay taxes. Not only that, the society in which we live benefits as well through our corporate social responsibility. It is, therefore, essential for us to avoid incidences of loss caused by customers’ nonpayment. And we do this by making it a requirement for every customer to make an advance payment upon 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 appropriate 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 cash flow.
Customers cover some of the cost of production when they commit by paying in advance for the products or services they want. We do not lose if they do not pay in full after completing the job.
Who Is Required to Make an Advance Payment?
In principle, we expect all customers to make an advance payment of not less than 45% when they confirm their orders. Clients whom we don’t require to deposit some money before the execution of the job are organisations, companies, and government institutions. Why? It is because they have pre-qualified us as their service provider. They only give us a Local Purchase Order (LPO) and pay after we have delivered the goods or services.
Goleza Designers adopted an advance payment policy to protect our business from customer nonpayment and better manage our cash flow. Therefore, we appeal to all of our potential clients to please understand us so that we can continue to serve you.