Rule One of Business: Get Paid
To get paid, you would understand is fundamentally important to your business because if you are not getting paid, why are you in business?
You will be surprised at the number of business people who permit their customers to make payment when and if they remember it. I know one trader who repeatedly holds bad debts like awards. How is that possible? Just because he doesn’t bring himself to ask for the money and people use him.
If you allow a customer credit, only do it after they have proved their integrity to you by paying cash on delivery (COD) for some time. Secondly, you can gauge whether they have the resources to pay you - if they don’t then do not do business with them. Don’t kid yourself into thinking “I need the work” or “I need the sales”. It’s damaging to do the job or providing the goods for free if you aren’t paid.
If you are the type of person who can’t request the payment when the service has been finished, try these cheats:
Tell your customer that when the service is completed, you require cash or cheque. They should be likely to have it there at at the finish date and you will not need to demand your payment.
When you send the initial quote, be sure your payment terms are clear.
Complete an invoice including the terms of payment plainly printed and send the customer the invoice when the service is finished up. They can see the invoice and reactively assume they have to pay you now without you going to say a thing. Fabricate a “nasty boss” who would skin you alive if you don’t go back with the cash for the job.
Organise your bank branch to have you running with Merchant facilities so you can accept credit cards for example Mastercard and Visa. The large majority of people use credit cards and it can stop the dilemma of the client not operating a cheque account or not having enough cash at the time.
As another option, don’t be persuaded against to keep any goods till after the payment is made. Don’t forget, until the goods are paid for, they remain yours.
If you plan to allow a customer credit, make sure you have got the following information about them some time 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
When you have all this information, contact the bank branch and make sure that they do use an account at there. Then, contact each trade reference and ask if they pay their bills on time 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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