Rule One of Business: Get Paid
To be paid, you would imagine is vitally the point to your business because if you are not being paid, what’s the point in business?
You may be surprised at the number of business people who let their clientele to simply pay when and if they feel like it. I know of a trader who always collects bad debts like charms. For what reason? Very possibly because he can’t bring himself to take the cash and people overpower him.
If you let a client credit, only do so because they have proven their integrity to you by paying cash on delivery (COD) for a period. Moreover, you need to find whether they have the money to pay you - otherwise you should not do business with them. Don’t fool yourself into the pattern of “I need the work” or “I need the sales”. It’s fruitless in doing the service or providing the goods for zip if you don’t get paid.
If you are the kind of person who can’t demand the payment even when the work has been completed, try these ideas:
Tell your customer that when all the work is finished, you need cash or cheque. They will likely have it ready at at the finish date and you do not need to demand your money.
When handing out the initial quote, make sure your payment terms are visible.
Create an invoice that has your terms of payment simply stated and give the customer the invoice when the service is done. They will look at the invoice and immediately know they will pay you the fee now without you needing to say a thing. Create a “nasty boss” who will burn you alive if you do not return with the payment for the service.
Ask your bank branch to provide you with Merchant facilities so you can accept credit cards like Mastercard and Visa. Many people use credit cards and it can solve the problem of the customer not owning a cheque account or not having enough cash in their pocket.
Otherwise, don’t be afraid to hold onto the goods till after you’ve been paid. Understand, until they have been paid for, they still remain yours.
If you decide you’re going to permit a customer credit, make sure you get the following contact information from them at a point PREVIOUSLY 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 possess all this detail, contact the banking institution and make sure that they have an account there. Then, phone each trade reference and inquire if they pay their debts on time or if they have any dilemmas 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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