Rule One of Business: Get Paid

May 25th, 2010

Getting paid, you would realise is vitally important at your business because if you aren’t paid, what are you doing in business?

You will be shocked at the heaps of business people who permit their clientele to make payment when and if they get around to it. I know of a trader who continuously gets bad debts like trophies. Why? Just because he won’t bring himself to demand the money and lets people take advantage of him.

If you let a customer credit, only do it if they have proved consistency to you by paying cash on delivery (COD) for a period. Also, you must gauge whether they have the resources to pay you - if they don’t then don’t do business with them. Don’t push 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 nothing if you don’t get paid.

If you are the sort of person who can’t request the cash when the service has been completed, try these tips:
Tell your customer that when the job is completed, you need cash or cheque. They should probably have it to hand over at the transacation and you will not have to demand your money.

When you give out the initial quote, be sure your payment terms are understandable.

Do up an invoice that has your terms of payment simply listed and send the customer the invoice when the work is done. They should take the invoice and reactively understand they have to pay you the money now without you going to say anything. Create a “vicious boss” who would flay you alive if you don’t return with the pay for the work.

Arrange with your bank branch to set you up with Merchant facilities so you can take credit cards such as Mastercard and Visa. The large part of people own credit cards and it should stop the dilemma of the client not holding a cheque account or not having the cash in their pocket.

Otherwise, don’t be persuaded against to hand over the goods til they have been paid for. Don’t forget, until the goods are paid for, the goods are still yours.

If you decide to allow somebody credit, make sure you have taken 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 have all this detail, ring the bank and make sure that they do have an account with them. Then, telephone all of the trade reference and find out if they pay their fees correctly 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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