Rule One of Business: Get Paid
Getting paid, just as you would imagine is vitally crucial in your business because if you are not getting paid, why are you in business?
You might be laughing at the loads of business people who permit their customers to make payment when and if they get on with it. I know of such a tradesman who repeatedly gets bad debts like awards. How is that possible? Just because he can’t bring himself to take the payment and allows people to intimidate him.
If you let a client credit, do it only after they have proven their integrity to you by paying cash on delivery (COD) for a time. Furthermore, you can check whether they have the cash to pay you – otherwise why do business with them. Don’t push yourself into the pattern of “I need the work” or “I need the sales”. It’s pointless doing the service or providing the goods for nothing if you are not getting paid.
If you are the type of person who can’t demand the money even after the job has been completed, try these ideas:
Tell your customer that when the work is completed, you need cash or cheque. They will probably have it on them at the point of sale and you don’t need to demand your pay.
When you hand out the quote, be sure your payment terms are understandable.
Complete an invoice with your terms of payment clearly stated and send the customer the invoice when the service is completed. They can review the invoice and immediately know they need to pay it off now without you going to say anything. Fabricate a “nasty boss” who will flay you alive if you can’t go back with the money for the job.
Set up your bank branch to set you up with Merchant facilities so you can accept credit cards including Mastercard and Visa. Many people utilize credit cards and it can prevent the issue of the customer not owning a cheque account or not having the right cash in their wallet.
Likewise, don’t be afraid to hand over the goods till after you have been paid. Understand, until the goods have been paid for, they still are yours.
If you plan to allow a customer credit, be sure you get the following contact details from them a week PREVIOUSLY you allow them credit.
- Name
- Address
- Phone number
- Bank name and address
- Account no.
- 3 trade references with their names, addresses and phone numbers
When you record all this detail, ring the bank and make for sure that they have an account there. Then, contact every trade reference and request if they pay their debts on time 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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