Rule One of Business: Get Paid
To get paid, as you would realise is vitally the point in your business because if you don’t get paid, what’s the point in business?
You might be laughing at the amount of business people who permit their clientele to simply pay when and if they get on with it. I am acquainted with a businessman who habitually gets bad debts like accolades. 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 if they have proved their integrity to you by paying cash on delivery (COD) for some time. Furthermore, you can gauge whether they have the means to pay you - if they don’t then don’t do business with them. Don’t fool yourself into the pattern of “I need the work” or “I need the sales”. It’s ultimately doing the work or providing the goods for zero if you aren’t paid.
If you are the type of person who can’t ask for the cash even after the work has been finished, try these tips:
Tell your client that when the job is completed, you require cash or cheque. They will likely have it ready at completion and you do not have to demand your pay.
When handing out a quote, be sure your payment terms are clear.
Create an invoice including your terms of payment clearly listed and hand the customer the invoice when the service is finished. They should review the invoice and generally assume they will pay you now without you being required to say anything. Invent a “cruel boss” who may flay you alive if you do not leave with the money for the service.
Set up your branch to hook you up with Merchant facilities so you can use credit cards including Mastercard and Visa. Many people utilize credit cards and it can cease the problem of the customer not having a cheque book or not having enough cash in their wallet.
Moreover, don’t be frightened to hand over the goods until after payment has been made. Understand, until the goods have been paid for, the goods are still yours.
If you plan to allow a client credit, make sure you get the following information about them at a time PREVIOUSLY you allow them credit.
- Name
- Address
- Phone number
- Bank name and address
- Account no.
- 3 trade references with their names, addresses and phone numbers
After you know all this detail, call the bank and make certain that they do have an account there. Then, ring every trade reference and find out if they pay their bills punctually or if there are 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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