Rule One of Business: Get Paid
To get paid, as you would understand is fundamentally crucial to your business because if you aren’t being paid, what are you doing in business?
You may be astounded at the amount of business people who allow their clients to make payment when and if they get on with it. I know a businessman who always collects bad debts like awards. How? Most likely because he doesn’t bring himself to ask for the cash and lets people take advantage of him.
If you let somebody credit, only do so because they have proven themselves to you by paying cash on delivery (COD) for some time. Furthermore, you must see whether they have the resources to pay you - if not then do not do business with them. Don’t kid yourself into thinking “I need the work” or “I need the sales”. It’s ultimately in doing the service or providing the goods for zero if you do not get paid.
If you are the kind of person who can’t request the payment even when the job has been finished, try these ideas:
Tell your client that when all the work is done, you need cash or cheque. They should be likely to have it to hand over at the transacation and you won’t have to demand your money.
When sending out the initial quote, be sure your payment terms are understandable.
Form an invoice with the terms of payment clearly stated and send the customer the invoice when the task is finished up. They can review the invoice and generally understand they will pay the fee now without you being required to say a word. Manufacture a “nasty boss” who will flay you alive if you do not return with the cash for the job.
Arrange with your bank to have you running with Merchant facilities so you can take credit cards including Mastercard and Visa. Most people use credit cards and it should fix the issue of the client not operating a cheque book or not having the cash on hand.
Alternatively, don’t be persuaded against to hold the promised goods until the payment has been made. Don’t forget, until the goods have been paid for, the goods are still yours.
If you choose to allow a client credit, be sure you have got the following contact information off them some time PREVIOUSLY you permit 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 detail, contact the branch and make certain that they do have an account at there. Then, phone each trade reference and request if they pay their fees on time or if there have been any issues 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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