Rule One of Business: Get Paid

May 25th, 2010

Being paid, you would figure is essentially crucial at 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 have their clientele to simply pay when and if they remember it. I am acquainted with such a tradesman who habitually holds bad debts like weeds. How is that? Probably because he won’t bring himself to take the payment and people can just overpower him.

If you permit somebody credit, do it only if they proved themselves to you by paying cash on delivery (COD) for a period. Furthermore, you need to gauge whether they have the means to pay you - if not why do business with them. Don’t kid yourself into the pattern of “I need the work” or “I need the sales”. It’s damaging 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 request the payment even when the job has been finished, try these tips:
Tell your client that when the service is finished, you will require cash or cheque. They should more than likely have it to hand over at completion and you will not have to demand your fee.

When giving out the quote, make sure your payment terms are understandable.

Do up an invoice including your terms of payment evidently stated and send the client the invoice when the service is done. They will review the invoice and immediately understand they need to pay the fee now without you going to say anything. Make up an “evil boss” who will torture you alive if you do not bring back the fee for the job.

Ask your bank to set you up with Merchant facilities so you can use credit cards for example Mastercard and Visa. Many people utilize credit cards and it could prevent the problem of the customer not operating a cheque account or not having the cash in their pocket.

Likewise, don’t be afraid to hold onto the goods til after they have been paid for. Remember, until they’re paid for, they are still yours.

If you decide to allow a customer credit, be sure you get the following contact details of 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

When you know all this detail, call the banking institution and make sure that they do have an account at there. Then, phone every trade reference and inquire if they pay their invoices correctly or if they have had any issues 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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