Seal a Leak in The Cash Bucket: Payment Plans
If you offer payment plans to customers—monthly, quarterly, or even just deferred lump sums—there’s one question you’ve got to answer honestly:
Are you actually tracking who owes you what… or just hoping for the best?
If you nodded, “Yes!”—then hallelujah, gold stars all around. ⭐
But if your answer is more like “Well… sort of…”—let’s talk. Because your business might be bleeding cash through a crack in the system, and it’s time to grab some duct tape.
What’s a Payment Plan Anyway?
Here’s the deal: Say you sell a service for $10,000 upfront.
Some customers might not have that kind of cash sitting pretty in their account, so you offer a payment plan: $2,000 a month for six months.
Smart, right? Yep—and profitable too. Over time, you’re actually earning more ($12,000 instead of $10,000), but there’s a catch:
💣 You’re now in the “Collections” business, whether you like it or not.
It sounds dramatic, but let’s break it down:
- Every payment plan is a promise, not a guarantee. You’re trusting that your client will pay you reliably each month. That trust needs backup—aka, a way to enforce the plan when things go sideways.
- Chasing down missed payments is exhausting. One failed transaction can mean back-and-forth emails, awkward reminders, and maybe even tense conversations. Multiply that by five clients? You’ve got yourself a headache.
- Emotionally, it’s a weird zone. You’re serving your clients, but now you’re also the one nudging them about unpaid invoices. It can feel icky—and if you’re conflict-avoidant (hello, most of us), it’s tempting to just ignore it and hope they remember.
- Systems fail silently. A card expires, a billing system glitches, or the client switches banks and forgets to update info. Without a tracking setup, you might not even notice until your cash flow’s in a nosedive.
So yes—when you offer payment plans, you’re also taking on a layer of risk and responsibility that needs its own system and process.
Where Payment Plans Go to Die
Payments can stop for all sorts of reasons:
- Expired credit cards
- Bank fraud alerts
- Intentional ghosting (it happens!)
- Systems that just stop charging without you noticing
Unless you’ve got your eyes on every transaction, those missed payments can slip right by you—and add up fast.
Which is why I always say:
Until you have the cash in hand, you haven’t really made the sale.
Track Like a Pro (Without Going Nuts)
The good news? You don’t need to become an accounting robot to stay on top of this.
Start with something as simple as a spreadsheet. Or if you’re using accounting tools like QuickBooks or Xero, have your bookkeeper set up a recurring invoice tracker. At the very least, update your list monthly to include:
🆕 New customers and their payment terms
✅ Payments received
⚠️ Missed or failed payments
This little habit (maybe 30 minutes tops each month) can transform how you forecast your cash flow.
With this system, you’ll gain something magical: predictability.
Imagine knowing that you’ve got $8,000 rolling in next Tuesday. Suddenly, hiring a VA or investing in that new software doesn’t feel like a leap of faith.
And if a client skips a payment? You’ll know immediately—giving you time to follow up before things spiral.
Your Action Step
If you’re offering payment plans, make sure your cash isn’t walking out the back door. Set up a simple tracker this week, and update it monthly.
Your future self (and your bank account) will thank you.
Because whether you’re DIY-ing with Excel or outsourcing it to your bookkeeper, knowing who owes what is one of the easiest ways to boost your business’s financial health.
Let’s plug that leak together, shall we?
Pam Prior
Author, Virtual CFO, and Finance Coach
“Your First CFO: The Accounting Cure for Small Business Owners” on AMAZON
“Founder to Exit: A CFO’s Blueprint for Small Business Owners” on AMAZON
***Disclaimer: This post is for informational purposes only and does not constitute financial or legal advice. Consult with a professional before making any financial decisions.
