How Collecting Payment at the Right Time Can Maximize Your Revenue
In a previous post we discussed the payment processing platforms most commonly used by real estate photographers. While your choice in processing platform can have an effect on the interface in which you collect payment, one of the other most important factors when it comes to payments is when you charge your customer. The time at which you collect payment for a shoot can have a significant impact on your revenue, as well as how you spend your time.
There are three main schools of thought on when you should charge your customer for a shoot:
- Pay at time of ordering
- Pay on Delivery (Pay to Download)
- Passive Invoicing (Net 30 or Net 60)
Each method has its pros and cons, however the most important factors to consider are how to create a seamless experience for your customer, while maximizing your time and revenue.
Pay at Time of Ordering
Pros: Requiring payment upfront when a customer is placing in order has become increasingly popular in the last few years. If your highest priority is ensuring you are guaranteed payment, then this is the way to go for you. Oftentimes requiring payment upfront can also filter out customers that are more likely to not pay an invoice, or do not have the money to pay you in a timely manner.
Cons: There are however a few downsides to requiring payment when a customer is ordering. The first is that it is a higher friction experience to place an order. If increasing the number of orders you are receiving is a top priority for you, then this may not be the best method. In addition to friction, you may also be losing out on valuable on-site upsell opportunities, such as adding a drone or twilight package. These services could still be performed and invoiced for after the fact, however this in large part negates the advantages of charging up front in the first place.
Pay on Delivery (Pay to Download)
Pros: Requiring payment when content is delivered is the most common payment practice that we see. This allows the customer to see the finished product, and the payment is tied directly to the deliverable. This method allows for little to no friction when the customer is placing the order, and feels like a very natural time to pay once they have received what they ordered. Limiting upfront friction can improve the number of agents placing orders. One of the biggest levers with this method of payment is using a system like Aryeo, that can lock the content from being downloaded until it has been paid for. This ensures that you are paid on time and limits the chance of an agent downloading the media and ignoring attempts to get them to pay. Lastly, collecting payment after the shoot allows for an easy on-site upsell experience which can also help to maximize your revenue.
Cons: While Pay on Delivery features quite a few pros, it is not without its cons. The most obvious drawback is the chance of doing work and never receiving payment. There are ways to ideally limit this possibility, however it is impossible to fully eliminate it. Charging on delivery can also lead to customers being surprised at the price of the final bill. It is reasonable to expect them to know the pricing if it is displayed when they ordered, however it is still all too common that a discussion is had when the product is delivered as to how it ended up at that price. This may not be an issue that hinders you on a day to day level much, it does however create awkward exchanges on occasion.
Passive Invoicing (Net 30 or Net 60)
Pros: The final time of payment method is passive invoicing. This method consists of delivering an invoice for one or many shoots at a time, and may or may not be tied to when the product is actually delivered. Sending an invoice often allows for the maximum flexibility for your clients. While they may need to go out of their way to pay the invoice at some time, the entirety of the transaction when placing an order is very frictionless. Going the route of passive invoicing also lends itself well to the pay cycles of larger organizations like brokerages. Allowing a brokerage or team to pay in bulk for shoots simplifies the process as a whole, and works well with their pay schedules.
Cons: The most impactful cons that stem from passive invoicing are the time spent collecting late payments, and managing short term cash flow problems. When a shoot is delivered but remains unpaid, it requires time to be spent chasing that payment down, and creates an uncomfortable situation for both parties. Not only are you short on time when this happens, but you must also manage not having cash in the bank for an undefined period of time. Unless you are charging through a passive invoicing method in order to secure a large contract, it will often result in the most time spent collecting payment, and maximize revenue the least of the three options.
Each payment method has its place in the industry, and whichever you choose ultimately depends on where your priorities lie as a company. If you are maximizing for getting paid on time and not performing any extra work than what you have been paid for, then Pay at Time of Ordering is for you. If you are looking to create the most seamless customer experience for your customer while maximizing revenue, then Pay on Delivery is likely your best option. If working with large teams and brokerages is at the core of your business, then Passive Invoicing is the way to go. Hopefully understanding the pros and cons of each will help guide you in making the best decision for your business. If you have questions about payment processing, or anything else related to running a real estate photography business, reach out to our team at [email protected]