Rule One of Business: Get Paid
Getting paid, just as you would imagine is fundamentally fundamental in your business because if you aren’t getting paid, why are you in business?
You would be laughing at the loads of business people who allow their clientele to pay them when and if they feel like it. I am acquainted with a businessman who continuously gets bad debts like trophies. How is that possible? Probably because he won’t bring himself to take the cash and allows people to overpower him.
If you allow a client credit, only do it when they proved consistency to you by paying cash on delivery (COD) for some period of time. Also, you should gauge whether they have the resources to pay you - if they don’t then why do business with them. Don’t push yourself into saying “I need the work” or “I need the sales”. It’s damaging when you do the work or providing the goods for nothing if you aren’t paid.
If you are the sort of person who can’t request the money even when the service has been finished, try these ideas:
Tell your customer that when all the work is finished, you require cash or cheque. They should more than likely have it there at completion and you will not have to demand your fee.
When you send out the initial quote, make sure your payment terms are simple.
Form an invoice with the terms of payment clearly printed and send the client the invoice when the work is finished up. They will see the invoice and immediately assume they will pay the fee now without you being required to say a word. Manufacture an “evil boss” who would skin you alive if you can not bring back the payment for the service.
Set up your bank branch to provide you with Merchant facilities so you can have credit cards including Mastercard and Visa. The large part of people own credit cards and it would cease the difficulty of the customer not holding a cheque book or not having the right cash at the time.
As another option, don’t be afraid to keep hold on the goods til after they have been paid for. Understand, until the goods have been paid for, they remain yours.
If you plan to let someone credit, make sure you have the following details from 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 possess all this information, ring the bank and make sure that they do have an account with them. Then, ring each trade reference and ask if they pay their debts correctly 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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