Rule One of Business: Get Paid
Tuesday, May 25th, 2010Getting paid, as you would realise is vitally the point at your business because if you are not getting paid, what are you doing in business?
You would be surprised at the loads of business people who permit their clientele to simply pay when and if they get around to it. I know of such a business owner who always gets bad debts like awards. Why is that? Most likely because he doesn’t bring himself to request the money and people overpower him.
If you give somebody credit, only do so after they have proved their worth to you by paying cash on delivery (COD) for some period of time. Furthermore, you should find whether they have the cash to pay you - if not do not do business with them. Don’t fool yourself into the pattern of “I need the work” or “I need the sales”. It’s pointless when you do the job or providing the goods for nothing if you aren’t getting paid.
If you are the kind of person who can’t request the fee when the service has been done, try these ideas:
Tell your customer that when all the work is finished up, you will need cash or cheque. They will likely have it ready at completion and you will not need to demand your money.
When giving out a quote, make sure your payment terms are plain.
Complete an invoice including the terms of payment plainly stated and send the client the invoice when the task is done. They can take the invoice and generally assume they need to pay the money now without you having to say anything. Create a “cruel boss” who may burn you alive if you can’t return with the money for the service.
Organise your bank to hook you up with Merchant facilities so you can accept credit cards like Mastercard and Visa. Many people utilize credit cards and it can prevent the problem of the customer not owning a cheque book or not having enough cash at the time.
As another option, don’t be afraid to keep the goods until after they have been paid for. Don’t forget, until the goods are paid for, the goods remain yours.
If you decide you’re going to permit someone credit, make sure you have taken the following contact 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 have all this detail, contact the bank and make sure that they use an account there. Then, telephone every trade reference and find out if they pay their debts correctly or if they have 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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