Being paid, you would figure is vitally crucial in your business because if you aren’t getting paid, what’s the point in business?
You might be surprised at the number of business people who have their clientele to make payment when and if they get on with it. I know one tradesman who always gets bad debts like trophies. How is that possible? Just because he can’t bring himself to demand the payment and people can just take advantage of him.
If you permit a customer credit, only do so because they proved themselves to you by paying cash on delivery (COD) for a period. Furthermore, you can check whether they have the resources to pay you - if not why do business with them. Don’t push yourself into thinking “I need the work” or “I need the sales”. It’s fruitless to do the work or providing the goods for free if you don’t get paid.
If you are the kind of person who can’t demand the payment even when the service has been done, try these hints:
Tell your client that when all the work is finished up, you will need cash or cheque. They should likely have it there at the transacation and you don’t need to demand your pay.
When you hand out an initial quote, be sure your payment terms are simple.
Complete an invoice that has the terms of payment evidently printed and give the client the invoice when the service is completed. They will look at the invoice and reactively understand they will pay you now without you going to say a thing. Fabricate an “evil boss” who might skin you alive if you don’t bring back the payment for the service.
Organise your bank to have you running with Merchant facilities so you can use credit cards like Mastercard and Visa. The majority of people have credit cards and it could fix the problem of the customer not operating a cheque account or not having the cash in their wallet.
Otherwise, don’t be afraid to keep hold on your goods until after you’ve been paid. Understand, until they have been paid for, they still are yours.
If you plan to give a client credit, make sure you have the following information about them a week BEFORE you permit them credit.
- Name
- Address
- Phone number
- Bank name and address
- Account no.
- 3 trade references with their names, addresses and phone numbers
Once you record all this detail, contact the bank and make certain that they do have an account there. Then, telephone each of the trade reference and request if they pay their debts punctually or if they have had 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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