Rule One of Business: Get Paid
To be paid, like you would realise is vitally the point at your business because if you aren’t being paid, what are you doing in business?
You will be astounded at the heaps of business people who only have their customer base to pay up when and if they remember it. I know such a tradesman who persistently makes bad debts like charms. Why is that? Just because he can’t bring himself to demand the money and people can just use him.
If you allow somebody credit, only do so after they have proved their worth to you by paying cash on delivery (COD) for some period of time. Secondly, you need to find whether they have the resources to pay you - if they don’t then do not do business with them. Don’t trick yourself into thinking “I need the work” or “I need the sales”. It’s pointless when you do the service or providing the goods for zero if you aren’t getting paid.
If you are the sort of person who can’t demand the money when the work has been completed, try these cheats:
Tell your customer that when the service is done, you will need cash or cheque. They should more than likely have it to hand over at at the finish date and you do not need to ask for your fee.
When you hand out your quote, make sure your payment terms are clear.
Do up an invoice with the terms of payment clearly stated and hand the client the invoice when the work is completed. They should see the invoice and immediately assume they can pay you now without you being required to say a thing. Create a “vicious boss” who may flay you alive if you can not bring back the money for the work.
Set up your bank to set you up with Merchant facilities so you can accept credit cards like Mastercard and Visa. The large majority of people possess credit cards and it could fix the difficulty of the client not holding a cheque account or not having the right amount of cash in their wallet.
Moreover, don’t be asked not to hold any goods till the payment has been made. Remember, until the goods are paid for, the goods still remain yours.
If you choose to allow someone credit, be sure you have taken the following contact details about them at a time BEFORE you let them credit.
- Name
- Address
- Phone number
- Bank name and address
- Account no.
- 3 trade references with their names, addresses and phone numbers
When you possess all this detail, call the banking institution and make for sure that they use an account with them. Then, contact each of the trade reference and request if they pay their invoices correctly 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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