Rule One of Business: Get Paid
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To get paid, just as you would figure is vitally fundamental in your business because if you aren’t being paid, what are you doing in business?
You will be laughing at the number of business people who permit their customers to simply pay when and if they feel like it. I am acquainted with a tradesman who habitually gets bad debts like trophies. For what reason? Simply because he doesn’t bring himself to request the money and people just use him.
If you permit a client credit, do so only if they have cleared their worth to you by paying cash on delivery (COD) for a period. Furthermore, you must see whether they have the cash to pay you - otherwise do not do business with them. Don’t fool yourself into the line of “I need the work” or “I need the sales”. It’s damaging in doing the work or providing the goods for zero if you aren’t paid.
If you are the kind of person who can’t demand the money even when the service has been completed, try these ideas:
Tell your client that when the service is completed, you will need cash or cheque. They will probably have it there at the transacation and you will not have to demand your payment.
When you hand out an initial quote, be sure your payment terms are understandable.
Complete an invoice with the terms of payment simply listed and give the client the invoice when the job is completed. They will see the invoice and immediately know they can pay the fee now without you needing to say a word. Manufacture a “vicious boss” who will torture you alive if you do not bring back the payment for the service.
Organise your banking institution to provide you with Merchant facilities so you can take credit cards for example Mastercard and Visa. Most people possess credit cards and it will fix the issue of the customer not operating a cheque account or not having enough cash on hand.
As another option, don’t be frightened to hand over the promised goods til after you’ve been paid. Don’t forget, until they’re paid for, the goods are still yours.
If you decide you’re going to let a customer credit, make sure you get the following contact information about them at a point BEFORE you permit them credit.
- Name
- Address
- Phone number
- Bank name and address
- Account no.
- 3 trade references with their names, addresses and phone numbers
After you possess all this information, telephone the bank branch and make for certain that they use an account with them. Then, call every trade reference and find out if they pay their invoices consistently or if there are any dilemmas 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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