Rule One of Business: Get Paid
To get paid, just like you would realise is fundamentally fundamental in your business because if you aren’t being paid, what are you doing in business?
You might be astounded at the loads of business people who allow their clients to simply pay when and if they get on with it. I am acquainted with one business owner who persistently gets bad debts like trophies. Why, do you think? Just because he cannot bring himself to demand the payment and people just use him.
If you allow somebody credit, only do it because they have proven themselves to you by paying cash on delivery (COD) for some period of time. Also, you must find whether they have the resources to pay you - if they don’t then you should not do business with them. Don’t trick yourself into the line of “I need the work” or “I need the sales”. It’s ultimately to do the service or providing the goods for nothing if you do not get paid.
If you are the sort of person who can’t demand the cash after the work has been completed, try these hints:
Tell your customer that when the work is completed, you need cash or cheque. They will likely have it to hand over at the transacation and you won’t need to ask for your pay.
When sending out the initial quote, be sure your payment terms are simple.
Create an invoice including your terms of payment evidently printed and hand the client the invoice when the task is finished up. They can look at the invoice and reactively understand they should pay you now without you being required to say a word. Create a “nasty boss” who will skin you alive if you do not return with the cash for the service.
Organise your bank branch to hook you up with Merchant facilities so you can take credit cards like Mastercard and Visa. The large majority of people possess credit cards and it should cease the dilemma of the client not having a cheque account or not having the right amount of cash at the time.
Otherwise, don’t be asked not to keep any goods until payment is paid. Understand, until they’re paid for, they are still yours.
If you plan to permit someone credit, make sure you have got the following contact information of them at a time 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 record all this detail, telephone the bank and make sure that they do use an account with them. Then, ring every trade reference and ask if they pay their bills correctly or if they have had 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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