Rule One of Business: Get Paid
To get paid, you would realise is fundamentally crucial in your business because if you are not being paid, what are you doing in business?
You might be laughing at the heaps of business people who permit their clientele to pay up when and if they remember it. I know one tradesman who persistently makes bad debts like weeds. Why is that? Most likely because he cannot bring himself to demand the cash and people take advantage of him.
If you let a client credit, do it only if they have proved their integrity to you by paying cash on delivery (COD) for a period. Also, you can check whether they have the cash to pay you - if they don’t then why do business with them. Don’t fool yourself into the line of “I need the work” or “I need the sales”. It’s fruitless 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 fee after the service has been done, try these ideas:
Tell your client that when the work is completed, you will need cash or cheque. They will be likely to have it there at the point of sale and you don’t have to ask for your pay.
When you give out a quote, make sure your payment terms are understandable.
Create an invoice including your terms of payment clearly stated and send the customer the invoice when the service is done. They will take the invoice and generally realise they will pay you for it now without you going to say a thing. Invent a “cruel boss” who would torture you alive if you do not leave with the fee for the work.
Ask your banking institution to have you running with Merchant facilities so you can use credit cards such as Mastercard and Visa. The large majority of people utilize credit cards and it can cease the difficulty of the client not owning a cheque account or not having the cash in their wallet.
Alternatively, don’t be asked not to keep hold on the goods till after payment is paid. Know, until they’re paid for, they still remain yours.
If you decide to allow a customer credit, make sure you have the following contact details about them at a time PREVIOUSLY you give 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, ring the branch and make certain that they have an account at there. Then, phone every trade reference and find out if they pay their invoices punctually or if they have any dilemmas 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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