Rule One of Business: Get Paid
To be paid, like you would understand is vitally important at your business because if you aren’t paid, what’s the point in business?
You will be astounded at the number of business people who permit their customer base to make payment when and if they get around to it. I know of one trader who persistently makes bad debts like trophies. How? Simply because he cannot bring himself to request the cash and people take advantage of him.
If you permit somebody credit, do so only after they have proved consistency to you by paying cash on delivery (COD) for some time. Furthermore, you need to check whether they have the funds to pay you - if not then you shouldn’t do business with them. Don’t fool 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 free if you do not get paid.
If you are the sort of person who can’t ask for the fee even after the service has been completed, try these tips:
Tell your customer that when all the work is completed, you require cash or cheque. They should probably have it to hand over at at the finish date and you will not need to ask for your payment.
When you give out the initial quote, be sure your payment terms are understandable.
Create an invoice including your terms of payment simply stated and hand the client the invoice when the job is done. They should see the invoice and simply assume they will pay you the money now without you going to say anything. Fabricate a “nasty boss” who will torture you alive if you can’t return with the pay for the work.
Set up your bank to hook you up with Merchant facilities so you can use credit cards for example Mastercard and Visa. Most people have credit cards and it would solve the dilemma of the client not holding a cheque book or not having the right amount of cash in their wallet.
Likewise, don’t be asked not to keep any goods til the payment is made. Don’t forget, until they have been paid for, they remain to be yours.
If you decide you’re going to give a client credit, make sure you take the following contact details about 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 take all this information, contact the banking institution and make for sure that they operate an account there. Then, call every trade reference and ask if they pay their bills on time 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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