Rule One of Business: Get Paid

May 25, 2010 by Rachel Banks
Filed under: Uncategorized 

To be paid, like you would realise is vitally fundamental to your business because if you are not getting paid, why are you in business?

You would be laughing at the amount of business people who have their customers to simply pay when and if they get around to it. I know such a tradesman who repetitively gets bad debts like awards. How is that? Simply because he can’t bring himself to take the money and allows people to use him.

If you give someone credit, only do so when they proved their worth to you by paying cash on delivery (COD) for some period. Moreover, you should see whether they have the money to pay you - if not don’t do business with them. Don’t fool yourself into thinking “I need the work” or “I need the sales”. It’s pointless when you do the job or providing the goods for nada if you don’t get paid.

If you are the type of person who can’t ask for the payment even after the service has been finished, try these hints:
Tell your customer that when the job is done, you need cash or cheque. They will probably have it to hand over at completion and you won’t have to ask for your money.

When sending out your quote, be sure your payment terms are evident.

Do up an invoice with your terms of payment plainly stated and hand the client the invoice when the job is done. They will review the invoice and immediately know they can pay you for it now without you going to say a word. Invent a “nasty boss” who would flay you alive if you do not bring back the pay for the service.

Organise your bank branch to have you running with Merchant facilities so you can use credit cards for example Mastercard and Visa. The majority of people utilize credit cards and it could solve the issue of the client not having a cheque account or not having the cash at the time.

Likewise, don’t be persuaded against to hold onto the goods til after payment has been made. Remember, until the goods have been paid for, they still remain yours.

If you choose to allow someone credit, make sure you get the following information of them at a time BEFORE you let 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 information, ring the bank branch and make sure that they have an account with them. Then, contact each trade reference and ask if they pay their debts punctually or if there are any problems 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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