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How to Mitigate Late Payment Risks

How to Mitigate Late Payment Risks

Update: 2019-08-23
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In Erik’s most recent episode, he talked about how sending an invoice to a client means you are effectively extending them credit. We realized that this can pose a big risk to the company, and needed to figure out a way to eliminate this risk and receive payment prior to completing client work. In episode 220 of Journey to $100 Million, Erik discusses how we plan to do this at Array Digital.

In business, you must complete the work, send an invoice, and then wait on payment. The payment is usually in net terms, such as net 30, meaning the client has 30 days to pay the invoice. Understanding that having to wait on receiving this payment can be risky, we decided to have a goal of net 0 for client payments, or requiring that they must pay immediately. To do this, we either need clients to pay by credit card, or ACH (automated clearing house). ACH means that we would extract money from the client’s checking account and be moved into our account in one to two days.

We have been trying to get our existing clients to switch to credit card or ACH, and eventually make these the only options for new clients. If our clients pay by ACH, they get a “discount” for our services. However, we end up charging more for other forms of payment because we want to ensure we are getting our net 0 payments. Our end goal is to have every client paying net 0. By doing this, we eliminate the risk to fund their operations and avoid any credit issues. We just want to do the work we do best and get paid upfront!



Erik J. Olson is an award-winning digital marketer & entrepreneur. The Founder & CEO of Array Digital, he is also the host of the Journey to $100 Million Flash Briefing and daily podcast, and the organizer of the Marketers Anonymous monthly meetups.



Kevin Daisey is an award-winning digital marketer & entrepreneur. He started his first company when he was just 23, and is the Founder & CMO of Array Digital. Kevin is also the co-host of the Journey to $100 Million Flash Briefing and daily podcast, and the co-organizer of the Marketers Anonymous monthly meetups.
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How to Mitigate Late Payment Risks

How to Mitigate Late Payment Risks