pro-forma/upfront payments

[ashbash]

Hi all
I have an art/design business, with a small studio/shop from where I sell my work, paintings, prints and cards.
I have a number of themes of greeting cards that I design and print myself, and retail at £2.50 each.

One range has really taken off and I will be launching it at Progressive Greetings trade show, and so am a bit terrified of the business /ordering side of things.

Currently I am selling to 5 shops, all of whom came by recommendation or personal cold calling, so I got to know the shop owners and formed a relationship based on trust and personal knowledge. All pay me via BACS and within a few days of getting their cards and invoice, so it is all a bit free and easy, which at these numbers is ok, but my concern is how to deal well with new customers regarding payment for goods.

It is ok to ask for money upfront for the first order, I think this is called pro-forma invoicing, but would you, as shop owners or retailers, be offended or put off if following orders were also expected to paid for upfront?
I realise this may be a naive question, but the customers who come into my shop pay for their goods there and then, and cashflow is crucial for all of us, and when I buy my paper stock I pay for it over the phone with the order., and I would be ok with paying on the day for other stock I need.

If I decided that all card sales must be paid for upfront, would that damage sales or would those who want my cards see that it is fair, and would also balance out the time spent on unpaid/late invoices/ chasing money?

Thanks for any input on this
Ashbash

 

[Astaroth]

A proforma invoice is simply a commitment to sell (basically an enhanced quote) at a price.

As to credit -v- up front payments, what is the norm in your industry? If the norm is for upfront payment then you may still lose a couple of customers but most will be used to it. If everyone has a 28 day credit term then you will probably lose more customers because of the expectation.

That said, a great product/ service and sensible pricing structures can overcome such things.

 

[lww]

A proforma invoice is simply a commitment to sell (basically an enhanced quote) at a price.

Although that is the correct definition of the term, I think 99.9% of business people will understand that "first order by pro-forma invoice" means payment is required in advance. And if they don't understand they soon will when nothing turns up until they pay

For what it's worth we have been trading for 12 months in a vaguely-related area of retail/wholesale and insist on pro-forma for first invoice. We have only had 2 exceptions in this time - the first was a High St chain who told us what our conditions would be )) and the other was a large established business for whom we made an exception given their history. After first invoice we then give 30 days credit, and we find the smaller customers pay very promptly, presumably as they apppreciate cashflow is so important.