Rule One of Business: Get Paid
To get paid, like you would understand is fundamentally important to your business because if you aren’t paid, what’s the point in business?
You might be astounded at the heaps of business people who let their clientele to pay up when and if they feel like it. I know one trader who continuously collects bad debts like awards. For what reason? Simply because he doesn’t bring himself to demand the payment and people just intimidate him.
If you allow someone credit, only do so after they cleared their worth to you by paying cash on delivery (COD) for some time. Secondly, you need to gauge whether they have the funds to pay you – if not then why do business with them. Don’t fool yourself into saying “I need the work” or “I need the sales”. It’s ultimately in doing the job or providing the goods for zero if you are not paid.
If you are the sort of person who can’t ask for the cash when the work has been done, try these ideas:
Tell your customer that when all the work is completed, you will need cash or cheque. They should likely have it on them at the transacation and you do not have to request your money.
When you send the initial quote, make sure your payment terms are plain.
Complete an invoice including your terms of payment clearly stated and send the client the invoice when the job is finished up. They can take the invoice and immediately understand they need to pay it off now without you being required to say a thing. Invent an “evil boss” who might torture you alive if you do not bring back the pay for the work.
Organise your banking to provide you with Merchant facilities so you can accept credit cards for example Mastercard and Visa. The large part of people have credit cards and it will solve the issue of the client not having a cheque book or not having enough cash at the time.
Otherwise, don’t be afraid to hand over the promised goods til the payment has been made. Remember, until they’re paid for, they remain to be yours.
If you decide to let a customer credit, make sure you have the following details from them a week BEFORE 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 information, call the bank branch and make certain that they do operate an account then. Then, contact all of the trade reference and find out if they pay their bills correctly or if there have been 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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