Cash Discounts

mikegar

mikegar

Location
Fresno CA
does anyone offer them and what have you found to be the benefits? i know ive seen it in other industries and was wondering if it works in ours.
 
That's what Im thinking. Last couple bids I included a cash discount. Im thinking it may also motivate some customers to pay right then and there.
 
When someone asks about a cash discount, I tell them that we run a tight ship, reporting all income. And I tell them to S my B's, for good measure.

SZ
 
We run a tight ship also. Everything is on the books, including the discounts. We will give cash discounts, but we prefer checks. It makes book keeping easier. Talk to your accountant about recording all discounts. See what he/she says.
 
The problem with unreported income is the domino effect. The hours worked on that job can't be reported, the guys then need to be paid off the books as well. When you or the guys apply for financing(mortgages, car loans, capital financing, etc...) this income can't be reported thus leaving you unable to get as much as you might have been able. If an employee is injured and out on disability or WC then their comp is 70% of the reported amount thus leaving them with much less than the 70%. The end result is more than just beating the tax man and insurance co's.

The nice thing about cash is there is no additional costs or delay to processing the payment. Many industries offer discounts for immediate payment as an incentive to get the cash in the accounts sooner. The strategy is to invest the money. The longer they have it the more they can make on it before it gets paid out to any of their bills. This is how big retailers make their money. They negotiate longer terms for payment on inventory, move the product quickly through deep discounts and third party financing. Take the cash invest it until the payments are due.
 
Thanks for all the replies. By no means am I a business man. I'm a tree guy. I'm learning all these things as I go and I appreciate all the feed back. I was thinking the discount would encourage customers to pay in a timely manner and help with cash flow. I also thought some cash off the books may be useful. Yet again I'm not a business man, thanks for the guidance.
 
If you own a tree care company then you are now a business man. Read "The E-Myth" for starters then get yourself into a business course.

The demands on your time of running a business will soon outstrip that of doing the tree work.
 
[ QUOTE ]
If you own a tree care company then you are now a business man. Read "The E-Myth" for starters then get yourself into a business course.

The demands on your time of running a business will soon outstrip that of doing the tree work.

[/ QUOTE ]
Thanks for the advice.
 
We practically NEVER have folks pay by cash. Maybe 70% check and 30% credit card.

However today we had a client that said they live their whole life cash only. Took this pic for you guys!
 
I only take cash if they pay the full amount. I still have to pay my guys, the taxes, the workers comp and all the rest. I do work as a contract climber for other companies for cash from time to time.
 
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