Rule One of Business: Get Paid
To be paid, as you would understand is essentially fundamental at your business because if you are not being paid, what are you doing in business?
You will be astounded at the number of business people who permit their customer base to simply pay when and if they get around to it. I am acquainted with one tradesman who habitually holds bad debts like charms. Why, do you think? Just because he won’t bring himself to take the money and lets people use him.
If you let a customer credit, only do it if they have proved consistency to you by paying cash on delivery (COD) for some period of time. Also, you can find whether they have the funds to pay you - if they don’t then don’t do business with them. Don’t trick yourself into saying “I need the work” or “I need the sales”. It’s damaging to do the service or providing the goods for free if you aren’t paid.
If you are the sort of person who can’t demand the cash even when the work has been finished, try these cheats:
Tell your client that when the work is finished, you will require cash or cheque. They should more than likely have it there at completion and you won’t have to demand your pay.
When sending out the initial quote, make sure your payment terms are visible.
Form an invoice with the terms of payment evidently listed and send the customer the invoice when the task is finished. They will review the invoice and immediately understand they will pay it off now without you being required to say a thing. Make up a “nasty boss” who might flay you alive if you do not bring back the pay for the job.
Organise your banking institution to hook you up with Merchant facilities so you can use credit cards for example Mastercard and Visa. Many people possess credit cards and it can fix the problem of the customer not owning a cheque book or not having the right amount of cash in their wallet.
Alternatively, don’t be persuaded against to hold onto the goods until you have been paid. Remember, until the goods have been paid for, they remain to be yours.
If you decide you’re going to allow someone credit, make sure you get the following details of them a week 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 record all this detail, contact the bank branch and make sure that they do operate an account with them. Then, telephone each of the trade reference and ask if they pay their invoices 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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