Rule One of Business: Get Paid
To get paid, just like you would realise is fundamentally important to your business because if you are not getting paid, what are you doing in business?
You will be laughing at the amount of business people who only have their customer base to simply pay when and if they get on with it. I know such a tradesman who repetitively holds bad debts like weeds. How is that possible? Simply because he cannot bring himself to take the cash and people just use him.
If you let a client credit, do so only when they have proven themselves to you by paying cash on delivery (COD) for a while. Also, you should find whether they have the funds to pay you - if not don’t do business with them. Don’t fool yourself into saying “I need the work” or “I need the sales”. It’s ultimately in doing the work or providing the goods for nothing if you aren’t paid.
If you are the type of person who can’t ask for the money after the service has been done, try these cheats:
Tell your client that when the work is done, you need cash or cheque. They will likely have it on them at the point of sale and you won’t need to request your payment.
When sending out your quote, make sure your payment terms are plain.
Do up an invoice that has the terms of payment plainly printed and send the client the invoice when the service is completed. They should review the invoice and reactively assume they will pay it off now without you going to say anything. Manufacture a “cruel boss” who might flay you alive if you can’t leave with the fee for the service.
Arrange with your bank to provide you with Merchant facilities so you can take credit cards including Mastercard and Visa. The large part of people own credit cards and it would fix the issue of the customer not holding a cheque account or not having the right amount of cash on hand.
Likewise, don’t be afraid to hold onto your goods till payment is paid. Understand, until the goods have been paid for, the goods still are yours.
If you choose to allow a customer credit, be sure you take the following contact information off them a week PREVIOUSLY you give them credit.
- Name
- Address
- Phone number
- Bank name and address
- Account no.
- 3 trade references with their names, addresses and phone numbers
When you possess all this detail, call the bank branch and make sure that they do have an account at there. Then, ring each trade reference and request if they pay their bills punctually or if they have any difficulties with them.
Most people will be willing to tell you if the person is troublesome. If everything is OK, allow them a moderate level of debt, say no more than $500 (depending on your business). Monitor the operation of the account for a few months before allowing this amount to be exceeded.
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