Rule One of Business: Get Paid
To be paid, as you would imagine is essentially fundamental at your business because if you aren’t being paid, what’s the point in business?
You may be laughing at the heaps of business people who only get their customers to make payment when and if they get on with it. I know of one businessman who repetitively makes bad debts like weeds. For what reason? Probably because he doesn’t bring himself to demand the cash and people take advantage of him.
If you let someone credit, do it only if they proved their worth to you by paying cash on delivery (COD) for a time. Furthermore, you need to find whether they have the means to pay you - if they don’t then you should not do business with them. Don’t push yourself into the pattern of “I need the work” or “I need the sales”. It’s damaging doing the service or providing the goods for zip if you aren’t paid.
If you are the sort of person who can’t demand the fee even when the job has been finished, try these ideas:
Tell your customer that when the work is done with, you require cash or cheque. They should be likely to have it to hand over at completion and you will not need to demand your payment.
When handing out the quote, be sure your payment terms are simple.
Create an invoice that has the terms of payment clearly stated and give the customer the invoice when the work is finished up. They will look at the invoice and reactively understand they need to pay it off now without you being required to say a word. Invent a “cruel boss” who may skin you alive if you can’t return with the pay for the work.
Set up your banking to set you up with Merchant facilities so you can accept credit cards including Mastercard and Visa. The majority of people own credit cards and it could fix the difficulty of the customer not having a cheque book or not having the cash in their wallet.
Alternatively, don’t be afraid to keep hold on your goods until the payment is made. Understand, until the goods are paid for, the goods still are yours.
If you decide to give someone credit, be sure you get the following contact details about them some time PREVIOUSLY you let them credit.
- Name
- Address
- Phone number
- Bank name and address
- Account no.
- 3 trade references with their names, addresses and phone numbers
Once you possess all this information, ring the banking institution and make certain that they use an account then. Then, contact every trade reference and find out if they pay their fees consistently or if they have had 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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