To be paid, like you would understand is fundamentally important to your business because if you aren’t being paid, what’s the point in business?
You may be surprised at the amount of business people who only have their customers to pay up when and if they remember it. I know of such a tradesman who repeatedly holds bad debts like trophies. For what reason? Just because he can’t bring himself to ask for the payment and people just take advantage of him.
If you allow someone credit, only do so because they have cleared consistency to you by paying cash on delivery (COD) for some period. Secondly, you must check whether they have the means to pay you – otherwise do not do business with them. Don’t trick yourself into the pattern of “I need the work” or “I need the sales”. It’s fruitless when you do the job or providing the goods for nothing if you aren’t paid.
If you are the kind of person who can’t demand the money after the job has been done, try these tips:
Tell your customer that when the work is finished, you will require cash or cheque. They should more than likely have it on them at at the finish date and you won’t have to request your payment.
When you send a quote, make sure your payment terms are visible.
Complete an invoice including your terms of payment simply printed and give the client the invoice when the job is finished up. They will look at the invoice and generally assume they will pay the fee now without you having to say a word. Make up a “cruel boss” who may skin you alive if you don’t leave with the pay for the job.
Ask your banking to have you running with Merchant facilities so you can take credit cards including Mastercard and Visa. Many people use credit cards and it can solve the problem of the client not holding a cheque book or not having the right cash at the time.
Otherwise, don’t be persuaded against to hand over any goods til you’ve been paid. Don’t forget, until the goods have been paid for, they still remain yours.
If you decide to give somebody credit, make sure you take the following contact information from them at a time PREVIOUSLY 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 take all this information, ring the branch and make sure that they have an account with them. Then, ring every trade reference and find out if they pay their invoices consistently or if they have had any problems 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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