Method of Payment Analysis Report
For many years I have heard florists debating on whether to extend credit to customers or not, with both sides offering strong arguments.
Well, flowerSoft now offers you a way to make that decision more intelligently.
Here is how. From flowerSoft’s Main menu, follow this path: M > R > A > A > M or 4
I am selecting one of the summary reports because they take less room on the page. Once I select M, flowerSoft will ask me which summary report I want to print.
(I’m going to select the default, which is choice #2 because it is shorter and easier to show here.)
Once you select either of these options, flowerSoft will ask you for the range of order dates you want the report on.
and once you select the dates you want, flowerSoft will show you this…
So now let’s compare the CREDIT CARD and ON ACCOUNT methods of payment.
As you can see above, payments by credit card account for almost 70% of all the orders taken, clearly outdistanced any other method of payment.
However, take a look at the average order amount. This seems to indicate that customers who have “house” accounts, spend 30% more on each order than customers who do not have one.
It could also be that in this case, “house” accounts are given to corporate clients, which tend to spend more on each order.
Having a “house” account also gives the customer a sense of “loyalty” to your shop. If they need to order flowers for any occasion they are a lot more likely to call you than to call some other shop or from some order gatherer, where they will have to give out their credit card number to some stranger.
So, if customers that have “house” accounts spend more than customers who don’t, why is it that a lot of florists are reluctant to extend credit to new customers?
Obviously, the main reason has to be the credit risk factor and the time period it takes to get paid. Credit card payments are immediate, although it will cost you approximately 3% of the total of the order, while payments on account take at least 30 days and many times more than that.
I guess it is all a matter of individual preference and knowing from past experience if your customers are normally good payers or not.
Are you willing and can you afford to wait 45 to 60 days or more for your money in order to increase your sales by a significant margin?
Those are decision you can only make, but now you can make a more informed decision by generating this report.
Comments are welcomed.