Rule One of Business: Get Paid
Being paid, just as you would figure is vitally crucial in your business because if you aren’t paid, what’s the point in business?
You would be laughing at the number of business people who permit their customers to pay up when and if they get on with it. I know of one trader who continuously gets bad debts like awards. Why, do you think? Probably because he can’t bring himself to take the payment and people take advantage of him.
If you give someone credit, do it only if they have cleared consistency to you by paying cash on delivery (COD) for a period. Secondly, you can check whether they have the means to pay you - otherwise you shouldn’t do business with them. Don’t fool yourself into the line of “I need the work” or “I need the sales”. It’s damaging doing the work or providing the goods for zip if you aren’t paid.
If you are the type of person who can’t demand the cash even when the work has been finished, try these ideas:
Tell your customer that when all the work is done, you will need cash or cheque. They should likely have it on them at completion and you will not have to demand your payment.
When sending out the quote, make sure your payment terms are clear.
Form an invoice with the terms of payment evidently printed and hand the customer the invoice when the task is finished. They can take the invoice and simply understand they should pay you the money now without you being required to say a thing. Manufacture a “nasty boss” who might flay you alive if you don’t go back with the money for the work.
Set up your bank to have you running with Merchant facilities so you can accept credit cards such as Mastercard and Visa. The large majority of people own credit cards and it would prevent the dilemma of the client not operating a cheque book or not having the right cash in their pocket.
Likewise, don’t be asked not to hand over the goods until the payment is made. Understand, until they have been paid for, they remain yours.
If you choose to give somebody credit, be sure you take the following contact details off them at a point BEFORE 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 take all this detail, telephone the branch and make sure that they do have an account there. Then, telephone all of the trade reference and request if they pay their invoices correctly or if there are 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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