NET 30 baby
As near as I can tell, this is just priced into everyone's expectations.
> For example, a big company happily using the $250 a month plan could, quite possibly, be happy to upgrade to a $5,000 a month contract if you offered them the right incentive. (Twenty times as much, you ask? No, transitioning from "pocket lint" to pennies. Stop thinking like a human. Think like a corporation. Corporations are like humans whose smallest increment of currency is the largest paycheck you've ever received.)
> This is important: Enterprise pricing is discontinuous with normal pricing. If the $250 a month plan entitles you to 500 foozles and an Enterprise needs 5,000 foozles, that costs thousands or tens thousands of dollars per month. If an Enterprise only needs 500 foozles, that costs thousands or tens of thousands of dollars per month. If an Enterprise only needs 50 foozles, that costs thousands or tens of thousands of dollars per month. This is partially justified by the amount of pain you're signing up for by doing an Enterprise sales process, but is mostly just pure, naked price discrimination. Enterprises are not price conscious. Don't attempt to sell them based on your price. ( For prices customarily contemplated by software companies.)
I know in my industry (pharma) we offer "prompt pay" discounts to our customers. 2% 30 net 60 for example (payment due in 60 days, get 2% off is paid in 30).
Of course a huge corporate has a lot more leverage with regards to terms than a small contractor.
if you offer a 2% discount on a 500$ service for paying in < 30 days, then you could give 10$ credit on the next bill
Obviously this depends on local regulations. For example, in Belgium the rule is that the basis for VAT does not include the 'prompt payment discount'. E.g.: invoice is 100, 2% 10 net 30. How much is the VAT @ 21%? It's 0.21 * 98, so your invoice can say 'total payable before xx/xx/xxxx: 98 + 0.21 * 98, after that: 100 + 0.21 * 98.
I had a long, drawn-out argument with a supplier once whose very accounting manager didn't understand this concept. They would have me pay VAT on the 100, because otherwise, according to them, they'd be giving me 'a discount on the VAT' (that sentence doesn't make any sense whatsoever). So I called the tax office, PLUS an accountant, to confirm the right way for them to bill me, and they still didn't believe me (or rather - didn't understand me). So just to shut me up, they said 'we'll give you another 2% discount' facepalm
Tangential to the discussion above, I guess, just venting ;)
Related, how many days you have to wait to get paid after you've spent money supplying the thing is called the cash conversion cycle. For a business selling to enterprises, maybe it's 90 days from doing work or building a widget and shipping it until they get paid. Dell back in the day would charge your credit card as soon as you bought a computer, and then only pay its supplier some time later, so that they had a negative number of days, I think around -5; in effect, their suppliers were loaning them money.
[0] http://en.wikipedia.org/wiki/Dow_Jones_Industrial_Average [1] http://ycharts.com/glossary/terms/cash_conversion_cycle
If you add a "late fee", it's a no go. But if you get an "early payment credit that will appear on your next invoice", it is ok.
Don't know if this is still the case, but for a long time, merchants couldn't add a "credit card fee" (even though they pay it at 2-3%). However, they could give a "cash discount".
Mathematically (and financially) equivalent. Yet somehow different.
We ended up raising prices something like 30% and offering discount terms like 15 day 30% discount.
They never once paid on time for the discount, although we would sometimes get paid in 30 days at the higher rate. (Typical pay rates at the time were Net-180 to Net-270).
So, price it up, and show it as a discount. A good customer inside an enterprise should be sympathetic; if you're good, you can turn it into you and your customer against the customer's payables department. You can say "tell me the real story on payables", and "I have to get paid faster than that or I need more cash than we talked about" to many of them.
I have a customer (my only semi-regular customer, sadly) that pays like clockwork. Seriously, I've learned that I can go to the mailbox 32 days after I sent an invoice and their check will be there. I hope it lasts!
I've had 45/75 and once 90 day terms forced down my throat. That being said a lot of my clients who have really long payment cycles can be very flexible with us on billing milestones (like 50%+ up front - heck we've had 90% "down" in decembers).
These days all my invoices are done electronically and I have to be honest at least for us we don't often get bills more than a day or two late. I have however learned when we were smaller that generally if something was more than 4-5 days late something was off on the invoice being processed. I stopped giving folks leeway more than about 3 days before I started hounding folks. YMMV.