Rule One of Business: Get Paid
Getting paid, you would realise is fundamentally important in your business because if you do not get paid, why are you in business?
You will be laughing at the heaps of business people who permit their clientele to pay them when and if they get on with it. I know a trader who always gets bad debts like trophies. How is that possible? Very possibly because he doesn’t bring himself to ask for the payment and allows people to take advantage of him.
If you give someone credit, do it only because they have proved themselves to you by paying cash on delivery (COD) for a time. Furthermore, you should find whether they have the cash to pay you - if they don’t then do not do business with them. Don’t trick yourself into the line of “I need the work” or “I need the sales”. It’s ultimately to do the service or providing the goods for free if you are not getting paid.
If you are the kind of person who can’t demand the payment after the work has been finished, try these tips:
Tell your client that when the work is done with, you need cash or cheque. They should probably have it ready at at the finish date and you do not have to demand your money.
When sending out the initial quote, make sure your payment terms are understandable.
Complete an invoice that has the terms of payment plainly listed and give the customer the invoice when the job is completed. They should look at the invoice and generally realise they will pay the money now without you going to say a thing. Fabricate a “nasty boss” who will burn you alive if you don’t return with the fee for the service.
Organise your banking institution to set you up with Merchant facilities so you can use credit cards such as Mastercard and Visa. Most people utilize credit cards and it will stop the issue of the customer not holding a cheque book or not having the right amount of cash in their wallet.
Alternatively, don’t be persuaded against to keep hold on the goods till after they have been paid for. Know, until the goods have been paid for, the goods still are yours.
If you choose to allow somebody credit, be sure you take the following contact details of them at a point BEFORE you give them credit.
- Name
- Address
- Phone number
- Bank name and address
- Account no.
- 3 trade references with their names, addresses and phone numbers
Once you take all this information, call the bank branch and make certain that they do have an account with them. Then, call every trade reference and find out if they pay their fees 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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