Rule One of Business: Get Paid
Being paid, like you would realise is fundamentally important at your business because if you aren’t getting paid, why are you in business?
You may be surprised at the number of business people who allow their customers to pay them when and if they remember it. I am acquainted with a tradesman who repeatedly makes bad debts like awards. Why is that? Most likely because he doesn’t bring himself to take the cash and people can just take advantage of him.
If you allow a customer credit, only do so if they proved their integrity to you by paying cash on delivery (COD) for some period. Also, you can find whether they have the means to pay you - otherwise do not do business with them. Don’t fool yourself into thinking “I need the work” or “I need the sales”. It’s fruitless to do the work or providing the goods for zip if you are not paid.
If you are the sort of person who can’t demand the money when the job has been finished, try these hints:
Tell your customer that when all the work is done with, you will need cash or cheque. They should likely have it to hand over at the transacation and you will not have to ask for your pay.
When you send a quote, make sure your payment terms are plain.
Form an invoice with your terms of payment evidently stated and give the customer the invoice when the task is done. They can see the invoice and simply realise they have to pay you the money now without you being required to say a word. Manufacture an “evil boss” who would torture you alive if you don’t return with the money for the job.
Set up your branch to provide you with Merchant facilities so you can accept credit cards including Mastercard and Visa. Many people own credit cards and it can prevent the issue of the customer not operating a cheque book or not having the right amount of cash at the time.
Likewise, don’t be frightened to keep hold on the promised goods till the payment is made. Remember, until they’re paid for, they still remain yours.
If you choose to give a customer credit, be sure you get the following information off them a week 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
When you know all this detail, call the banking institution and make for sure that they operate an account then. Then, ring all of the trade reference and request if they pay their debts punctually or if there have been 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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