To be paid, as you would figure is fundamentally crucial to your business because if you don’t get paid, what’s the point in business?
You may be astounded at the number of business people who allow their customer base to pay them when and if they get on with it. I am acquainted with one business owner who continuously makes bad debts like trophies. How is that possible? Just because he won’t bring himself to demand the money and people overpower him.
If you give somebody credit, only do so when they have cleared their worth to you by paying cash on delivery (COD) for some time. Also, you should gauge whether they have the cash to pay you – if not you shouldn’t do business with them. Don’t trick yourself into the pattern of “I need the work” or “I need the sales”. It’s pointless when you do the service or providing the goods for nothing if you don’t get paid.
If you are the sort of person who can’t ask for the payment even after the service has been finished, try these ideas:
Tell your client that when the service is done, you need cash or cheque. They will more than likely have it on them at the transacation and you will not have to demand your pay.
When sending out the quote, make sure your payment terms are understandable.
Do up an invoice that has your terms of payment simply stated and send the customer the invoice when the service is finished. They can take the invoice and immediately know they should pay the fee now without you going to say a word. Make up a “vicious boss” who will skin you alive if you don’t go back with the payment for the job.
Arrange with your bank branch to hook you up with Merchant facilities so you can take credit cards like Mastercard and Visa. The large part of people use credit cards and it will solve the issue of the client not holding a cheque account or not having the right cash at the time.
As another option, don’t be frightened to keep hold on your goods till after the payment has been made. Remember, until the goods have been paid for, they still remain yours.
If you choose to give a client credit, be sure you take the following details of them a week BEFORE you allow them credit.
- Name
- Address
- Phone number
- Bank name and address
- Account no.
- 3 trade references with their names, addresses and phone numbers
After you record all this information, call the banking institution and make for certain that they do have an account there. Then, telephone all of the trade reference and request if they pay their debts punctually 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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