Rule One of Business: Get Paid
To be paid, just as you would understand is vitally important to your business because if you aren’t being paid, why are you in business?
You will be shocked at the heaps of business people who only get their clients to pay them when and if they remember it. I know of such a business owner who persistently collects bad debts like awards. Why, do you think? Simply because he cannot bring himself to request the payment and people just use him.
If you permit somebody credit, only do so if they have proved consistency to you by paying cash on delivery (COD) for a time. Moreover, you must gauge whether they have the means to pay you - otherwise you should not do business with them. Don’t fool yourself into the pattern of “I need the work” or “I need the sales”. It’s fruitless doing the work or providing the goods for nada if you do not get paid.
If you are the sort of person who can’t ask for the money even when the job has been completed, try these tips:
Tell your client that when the job is done, you need cash or cheque. They will probably have it on them at the point of sale and you will not need to request your money.
When giving out an initial quote, make sure your payment terms are clear.
Form an invoice including the terms of payment evidently stated and give the customer the invoice when the job is completed. They can take the invoice and immediately know they can pay you now without you being required to say anything. Invent a “vicious boss” who might flay you alive if you can’t bring back the cash for the service.
Set up your banking to set you up with Merchant facilities so you can use credit cards such as Mastercard and Visa. The large part of people have credit cards and it will cease the dilemma of the client not operating a cheque book or not having the cash in their pocket.
As another option, don’t be afraid to hold onto any goods til after you have been paid. Don’t forget, until the goods have been paid for, the goods remain to be yours.
If you choose to let a customer credit, make sure you take the following information off them a week 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
Once you have all this detail, contact the banking institution and make for sure that they do have an account at there. Then, call all of the trade reference and request if they pay their bills correctly 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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