Rule One of Business: Get Paid
Getting paid, as you would figure is essentially crucial to your business because if you aren’t being paid, what’s the point in business?
You would be shocked at the loads of business people who only get their clients to pay them when and if they get on with it. I know of a tradesman who always holds bad debts like trophies. How? Very possibly because he won’t bring himself to request the cash and people can just intimidate him.
If you give somebody credit, only do so after they proved their worth to you by paying cash on delivery (COD) for some period of time. Furthermore, you need to see whether they have the means to pay you - if not don’t do business with them. Don’t fool yourself into saying “I need the work” or “I need the sales”. It’s damaging in doing the service or providing the goods for free if you aren’t getting paid.
If you are the sort of person who can’t demand the fee even when the work has been completed, try these tips:
Tell your client that when all the work is done with, you will require cash or cheque. They should probably have it there at completion and you don’t need to ask for your pay.
When you hand out an initial quote, make sure your payment terms are simple.
Do up an invoice with your terms of payment clearly stated and send the customer the invoice when the job is done. They should see the invoice and immediately realise they will pay the money now without you needing to say a word. Invent a “cruel boss” who might skin you alive if you can not leave with the fee for the service.
Arrange with your branch to hook you up with Merchant facilities so you can take credit cards such as Mastercard and Visa. The large majority of people utilize credit cards and it will prevent the dilemma of the client not operating a cheque book or not having enough cash on hand.
Likewise, don’t be asked not to keep hold on any goods until after the payment is made. Understand, until they have been paid for, the goods are still yours.
If you choose to permit someone credit, make sure you get the following information about 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
When you take all this detail, contact the banking institution and make for sure that they do use an account then. Then, contact every trade reference and ask if they pay their invoices punctually 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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