Rule One of Business: Get Paid
Being paid, as you would realise is vitally fundamental in your business because if you aren’t being paid, what’s the point in business?
You may be surprised at the loads of business people who only get their clients to pay them when and if they feel like it. I know of such a tradesman who habitually collects bad debts like charms. Why? Very possibly because he can’t bring himself to demand the cash and people take advantage of him.
If you let someone credit, do so only when they have proved themselves to you by paying cash on delivery (COD) for a while. Also, you can check whether they have the cash to pay you - if not then you shouldn’t do business with them. Don’t trick yourself into thinking “I need the work” or “I need the sales”. It’s pointless in doing the job or providing the goods for zero if you are not getting paid.
If you are the type of person who can’t request the cash even when the job has been finished, try these ideas:
Tell your client that when the work is done, you require cash or cheque. They will be likely to have it to hand over at the point of sale and you do not need to ask for your money.
When giving out the initial quote, be sure your payment terms are evident.
Create an invoice with the terms of payment simply listed and hand the client the invoice when the service is finished up. They should look at the invoice and immediately realise they need to pay the fee now without you having to say a word. Fabricate a “cruel boss” who may skin you alive if you do not return with the payment for the service.
Organise your banking institution to set you up with Merchant facilities so you can take credit cards like Mastercard and Visa. Many people have credit cards and it will fix the dilemma of the customer not holding a cheque account or not having the cash in their wallet.
Likewise, don’t be afraid to hold onto any goods until you’ve been paid. Know, until they have been paid for, they remain to be yours.
If you decide you’re going to let a client credit, be sure you have got the following information of 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
Once you know all this detail, telephone the branch and make certain that they do have an account at there. Then, telephone each of the trade reference and inquire if they pay their debts consistently or if they have 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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