Getting paid, just as you would realise is vitally fundamental to your business because if you do not get paid, why are you in business?
You would be surprised at the loads of business people who let their clientele to pay up when and if they remember it. I know one tradesman who always holds bad debts like awards. How is that? Just because he cannot bring himself to ask for the money and people can just intimidate him.
If you allow somebody credit, do it only after they cleared their worth to you by paying cash on delivery (COD) for a time. Moreover, you can see whether they have the cash to pay you – otherwise why do business with them. Don’t trick yourself into the pattern of “I need the work” or “I need the sales”. It’s pointless to do the job or providing the goods for nothing if you are not paid.
If you are the kind of person who can’t ask for the money even when the job has been completed, try these tips:
Tell your customer that when the job is completed, you will need cash or cheque. They should be likely to have it ready at at the finish date and you do not have to ask for your fee.
When handing out an initial quote, make sure your payment terms are evident.
Form an invoice with your terms of payment evidently listed and give the client the invoice when the service is finished up. They can look at the invoice and reactively assume they should pay you for it now without you having to say a word. Invent a “nasty boss” who would skin you alive if you don’t leave with the cash for the service.
Set up your banking to provide you with Merchant facilities so you can have credit cards including Mastercard and Visa. Most people utilize credit cards and it could prevent the issue of the customer not operating a cheque book or not having the right amount of cash at the time.
Moreover, don’t be asked not to hold the promised goods until the payment is made. Don’t forget, until the goods have been paid for, they still are yours.
If you plan to give a customer credit, make sure you have the following contact information about them a week PREVIOUSLY you give them credit.
- Name
- Address
- Phone number
- Bank name and address
- Account no.
- 3 trade references with their names, addresses and phone numbers
When you have all this information, contact the bank and make certain that they do use an account there. Then, contact each of the trade reference and ask if they pay their bills consistently or if there are 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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