Rule One of Business: Get Paid

May 25th, 2010

To get paid, like you would understand is essentially fundamental at your business because if you are not paid, what’s the point in business?

You might be laughing at the heaps of business people who have their clientele to pay up when and if they get on with it. I know of such a businessman who always holds bad debts like weeds. How is that possible? Very possibly because he cannot bring himself to demand the cash and people just take advantage of him.

If you permit a customer credit, only do it when they have proven consistency to you by paying cash on delivery (COD) for some time. Secondly, you need to check whether they have the resources to pay you - if they don’t then you shouldn’t do business with them. Don’t fool yourself into the pattern of “I need the work” or “I need the sales”. It’s damaging doing the service 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 after the work has been finished, try these tips:
Tell your client that when the service is finished, you will need cash or cheque. They should likely have it there at at the finish date and you do not have to demand your pay.

When giving out an initial quote, make sure your payment terms are evident.

Create an invoice including the terms of payment simply stated and hand the customer the invoice when the service is finished up. They can take the invoice and reactively know they have to pay the money now without you needing to say a word. Make up a “nasty boss” who may flay you alive if you can’t go back with the pay for the work.

Ask your banking to provide you with Merchant facilities so you can have credit cards for example Mastercard and Visa. Many people utilize credit cards and it should fix the issue of the client not having a cheque book or not having enough cash on hand.

Alternatively, don’t be afraid to hold onto any goods until after you’ve been paid. Understand, until they’re paid for, the goods remain to be yours.

If you plan to allow someone credit, make sure you have the following contact information 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

Once you have all this detail, ring the banking institution and make for certain that they do use an account at there. Then, contact every trade reference and find out if they pay their debts consistently or if there have been 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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