Rule One of Business: Get Paid
Being paid, just as you would figure is vitally important in your business because if you do not get paid, why are you in business?
You will be surprised at the number of business people who permit their customer base to pay up when and if they get on with it. I know of one business owner who persistently holds bad debts like weeds. How is that? Just because he can’t bring himself to request the cash and lets people overpower him.
If you let somebody credit, only do it if they have proved their integrity to you by paying cash on delivery (COD) for a while. Also, you can gauge whether they have the funds to pay you - otherwise you should not do business with them. Don’t kid yourself into the line of “I need the work” or “I need the sales”. It’s ultimately doing the work or providing the goods for free if you aren’t paid.
If you are the kind of person who can’t ask for the cash even after the work has been done, try these cheats:
Tell your client that when the work is completed, you will require cash or cheque. They will likely have it ready at the point of sale and you won’t have to request your money.
When sending out a quote, be sure your payment terms are visible.
Form an invoice that has your terms of payment evidently listed and send the client the invoice when the task is finished. They should take the invoice and simply know they need to pay you now without you being required to say a word. Make up a “cruel boss” who will flay you alive if you don’t go back with the payment for the work.
Ask your banking to have you running with Merchant facilities so you can take credit cards for example Mastercard and Visa. The majority of people own credit cards and it can solve the problem of the client not having a cheque account or not having the cash on hand.
Moreover, don’t be afraid to keep the goods until you have been paid. Don’t forget, until they have been paid for, the goods still remain yours.
If you decide to give a customer credit, be sure you have the following contact details about them some time BEFORE you allow 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, ring the bank branch and make for certain that they have an account then. Then, contact each trade reference and find out if they pay their invoices on time 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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