Rule One of Business: Get Paid
Being paid, as you would figure is essentially the point to your business because if you aren’t getting paid, why are you in business?
You would be shocked at the number of business people who permit their clients to make payment when and if they get on with it. I know a trader who always collects bad debts like accolades. How is that? Most likely because he doesn’t bring himself to demand the money and people can just intimidate him.
If you give a client credit, only do so because they have cleared their worth to you by paying cash on delivery (COD) for some period of time. Furthermore, you need to gauge whether they have the cash to pay you - if not don’t do business with them. Don’t kid yourself into thinking “I need the work” or “I need the sales”. It’s damaging in doing the job or providing the goods for zero if you are not getting paid.
If you are the kind of person who can’t request the cash even when the work has been completed, try these tips:
Tell your customer that when the work is completed, you need cash or cheque. They should more than likely have it to hand over at completion and you don’t need to request your fee.
When handing out a quote, make sure your payment terms are plain.
Create an invoice that has your terms of payment simply listed and give the customer the invoice when the work is completed. They should see the invoice and generally understand they need to pay you the fee now without you being required to say anything. Make up a “vicious boss” who may skin you alive if you do not bring back the cash for the work.
Ask your banking to set you up with Merchant facilities so you can accept credit cards like Mastercard and Visa. The large part of people use credit cards and it can cease the issue of the customer not having a cheque account or not having the cash on hand.
Moreover, don’t be afraid to keep any goods till after the payment has been made. Know, until they’re paid for, the goods still are yours.
If you decide to permit a customer credit, be sure you have the following contact information about 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
Once you possess all this information, call the bank and make certain that they do operate an account at there. Then, contact each trade reference and find out if they pay their fees on time or if they have 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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