Rule One of Business: Get Paid
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Getting paid, you would imagine is vitally crucial at your business because if you are not paid, why are you in business?
You will be laughing at the loads of business people who allow their clients to pay them when and if they get around to it. I know such a tradesman who continuously makes bad debts like charms. How is that? Simply because he won’t bring himself to demand the payment and people just take advantage of him.
If you let a client credit, only do so when they cleared their worth to you by paying cash on delivery (COD) for a time. Also, you must find whether they have the money to pay you - if not you shouldn’t do business with them. Don’t trick yourself into thinking “I need the work” or “I need the sales”. It’s damaging when you do the work or providing the goods for zero if you are not paid.
If you are the type of person who can’t ask for the cash when the job has been finished, try these cheats:
Tell your client that when the job is finished, you will require cash or cheque. They will more than likely have it on them at the point of sale and you don’t need to demand your fee.
When you send out an initial quote, be sure your payment terms are visible.
Complete an invoice including your terms of payment evidently stated and send the client the invoice when the task is finished. They can take the invoice and simply realise they have to pay it off now without you needing to say a thing. Make up a “vicious boss” who may flay you alive if you do not go back with the cash for the work.
Set up your branch to set you up with Merchant facilities so you can take credit cards including Mastercard and Visa. Many people use credit cards and it should cease the dilemma of the client not holding a cheque account or not having the right cash in their wallet.
Likewise, don’t be asked not to keep hold on your goods till after payment has been made. Don’t forget, until the goods are paid for, the goods still are yours.
If you choose to allow a customer credit, be sure you have the following contact information about them a week BEFORE you give them credit.
- Name
- Address
- Phone number
- Bank name and address
- Account no.
- 3 trade references with their names, addresses and phone numbers
After you record all this detail, telephone the banking institution and make sure that they have an account with them. Then, call all of the trade reference and request if they pay their invoices consistently or if they have any issues 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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