Rule One of Business: Get Paid
Getting paid, like you would figure is essentially crucial at your business because if you don’t get paid, why are you in business?
You would be surprised at the loads of business people who only get their clientele to pay up when and if they feel like it. I know of such a business owner who always collects bad debts like trophies. Why, do you think? Most likely because he won’t bring himself to ask for the cash and allows people to take advantage of him.
If you allow a customer credit, do so only when they cleared their worth to you by paying cash on delivery (COD) for some period. Furthermore, you must see whether they have the funds to pay you - if they don’t then you shouldn’t do business with them. Don’t kid yourself into the pattern of “I need the work” or “I need the sales”. It’s pointless in doing the job 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 hints:
Tell your client that when all the work is finished up, you will require cash or cheque. They should be likely to have it there at completion and you don’t have to ask for your payment.
When you give out an initial quote, be sure your payment terms are plain.
Form an invoice that has the terms of payment evidently printed and hand the customer the invoice when the work is finished up. They will review the invoice and immediately realise they can pay you now without you being required to say anything. Make up a “cruel boss” who may torture you alive if you can not return with the pay for the service.
Set up your banking to provide you with Merchant facilities so you can accept credit cards including Mastercard and Visa. The large majority of people use credit cards and it should cease the difficulty of the client not holding a cheque book or not having the right cash at the time.
As another option, don’t be afraid to hold onto your goods till after payment has been made. Don’t forget, until they’re paid for, they are still yours.
If you choose to permit someone credit, be sure you get the following information of 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
Once you record all this detail, telephone the bank and make for certain that they do have an account at there. Then, contact each trade reference and inquire 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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