Rule One of Business: Get Paid
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Getting paid, like you would imagine is vitally fundamental in your business because if you don’t get paid, what’s the point in business?
You may be shocked at the loads of business people who only have their customers to pay up when and if they feel like it. I am acquainted with one tradesman who habitually makes bad debts like trophies. Why, do you think? Probably because he doesn’t bring himself to take the payment and people just use him.
If you let a client credit, only do it after they have proved their integrity to you by paying cash on delivery (COD) for a time. Also, you must find whether they have the means to pay you - if not you should not do business with them. Don’t kid yourself into thinking “I need the work” or “I need the sales”. It’s ultimately when you do the job or providing the goods for zip if you aren’t paid.
If you are the type of person who can’t demand the cash even when the job has been completed, try these hints:
Tell your client that when the work is completed, you will need cash or cheque. They should more than likely have it to hand over at completion and you don’t have to demand your money.
When you send your quote, make sure your payment terms are clear.
Form an invoice with your terms of payment clearly printed and send the customer the invoice when the service is done. They will look at the invoice and generally assume they should pay you now without you being required to say anything. Invent a “cruel boss” who might flay you alive if you can’t go back with the pay for the work.
Arrange with your bank branch to hook you up with Merchant facilities so you can take credit cards like Mastercard and Visa. Many people utilize credit cards and it could cease the problem of the client not owning a cheque account or not having the right amount of cash in their wallet.
Likewise, don’t be asked not to hand over your goods till the payment is made. Don’t forget, until they’re paid for, they still are yours.
If you decide you’re going to permit a customer credit, be sure you have got the following contact details from them at a point 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
Once you take all this detail, telephone the banking institution and make for sure that they operate an account with them. Then, ring each of the trade reference and request if they pay their debts correctly 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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