Rule One of Business: Get Paid
Being paid, as you would realise is essentially important at your business because if you are not getting paid, why are you in business?
You may be shocked at the number of business people who only get their customer base to pay up when and if they remember it. I am acquainted with such a tradesman who repeatedly gets bad debts like awards. How is that? Very possibly because he cannot bring himself to request the money and lets people intimidate him.
If you give a customer credit, only do so because they have proven their worth to you by paying cash on delivery (COD) for some period of time. Also, you should check whether they have the money to pay you - otherwise you should not do business with them. Don’t kid yourself into the line of “I need the work” or “I need the sales”. It’s fruitless to do the work or providing the goods for free if you are not paid.
If you are the sort of person who can’t ask for the payment when the job has been completed, try these hints:
Tell your customer that when the job is done with, you will need cash or cheque. They should more than likely have it there at at the finish date and you won’t have to request your pay.
When you send the initial quote, make sure your payment terms are understandable.
Create an invoice including your terms of payment plainly stated and give the customer the invoice when the work is done. They will review the invoice and reactively assume they will pay you now without you having to say anything. Invent a “nasty boss” who may flay you alive if you do not go back with the payment for the job.
Organise your bank to hook you up with Merchant facilities so you can take credit cards for example Mastercard and Visa. The large majority of people use credit cards and it could cease the difficulty of the customer not owning a cheque book or not having the cash in their pocket.
Likewise, don’t be frightened to keep hold on your goods til after the payment is made. Know, until they have been paid for, the goods still are yours.
If you choose to let a client credit, be sure you have the following details off 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 possess all this detail, telephone the bank branch and make for certain that they have an account then. Then, phone each of the trade reference and request if they pay their fees correctly or if they have 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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