Postpay: what is it and how to use it effectively in your activities

Often in the process of implementing any economic activity, the question arises as to which calculation for the work performed or services provided from two popular ones: prepayment and postpayment is better? Let's try to understand this article with these two terms.

Comparison of different forms of payment

To the question: "What form of payment is better?" - Any businessman finds an answer for himself individually. Also, each of the business entities can choose a convenient calculation for themselves. This can be either a prepayment or a postpay. What it is, you can determine from the meaning of the word itself. For a deep understanding of this term, it is necessary to consider it on the example of certain spheres of activity of economic entities.

Prepayment

So, what is prepayment? This is some amount that is transferred to the seller at the initial stage as an advance for the work done or goods delivered in the future. A positive aspect in this form of payment is the seller's confidence that he will not be "thrown". With this feeling, and working more fun. However, there is a sense of duty, and customers sometimes start bothering with questions about the status of the work performed. Especially this situation can arise if the buyer has not yet formed a reputation in the domestic market. An experienced businessman, in general, has established contacts with serious partners who trust him.

There are different sizes of prepayment: 30%, 50%, and sometimes 100% of the agreed amount. The most optimal option is considered to be an advance payment in the amount of half the value of the order. If you focus on 100% prepayment, you can lose potential customers, especially at the initial stage of professional development.

Postpay

What is it, and how to use this form of payment correctly? Often companies practice this form of payment for several days (sometimes up to 20) after receiving goods or services. Firstly, the effectiveness of postpayments is associated with a significant reduction in labor costs, as the supplier needs to exhibit only one package of documents, and the buyer - once to pass through internal procedures when making payments. A sufficient condition for successful interaction is the postpay in the contract. Secondly, this form of payment can significantly reduce the risk of non-receipt of goods or services of the required quality. And, finally, thirdly, many financiers claim about a form such as postpay, that this is exactly the effective tool that allows you to organize financial flows. Therefore, it is possible to achieve financial stability only by comparing the receipts of monetary funds with financial liabilities.

Thus, the importance of quality financial planning for any business entity is very high, and postpayments in this process are assigned a certain role. The same financial reliability and ability to manage their own financial flows is expected from another participant in the economic relationship - the supplier.

Custom products

In carrying out acquisitions, each buyer is faced with the question of which payment terms to choose. In other words, when exactly to pay for the goods: before it is received or after. Most people believe that postpay will be better, that this should ensure receipt of the goods on hand. However, often shops (for example, in the World Wide Web) work only on full prepayment, which causes some mistrust on the part of buyers.

Postpay in the advertising business

Unfortunately, this form of calculation is one of the main factors that hamper the development of the advertising industry. This is due to the inability to complete a new order before receiving payment for the previous project.

Postpay is capable of generating such a problem of the advertising market, as a shortage of working capital. Of course, there are cardinal ways to deal with it: non-payment for rent, delay in wages, attempts to postpone vacation or borrow money from friends. However, all these methods will ultimately lead to the closure of the business.

Therefore, as a "lifebuoy", we can propose the use of factoring, in which all problems can turn into advantages.

First, factoring does not require collateral for credit processing. As confirming documents are invoices or certificates of work performed, certified by the parties. For a factor, such documents are recognized as confirming the customer's obligations, and under such paper, he will be able to give out money.

Secondly, many advertising agencies have one or two large customers. The factor will not make it very difficult to verify the solvency. Therefore, this fact significantly increases the chances of the advertising agency to receive the necessary funding.

Thirdly, the advertising agency can receive 90% of its value right after the order is fulfilled. And the remaining money is transferred after the factor collects the full amount from the customer and keeps the commission.

Summarizing the material presented in this article, it should be noted that the use of both prepayment and postpay is the choice only of the participants in economic relations.