Rule One of Business: Get Paid
Being paid, you would imagine is fundamentally crucial to your business because if you aren’t paid, what are you doing in business?
You might be laughing at the loads of business people who only have their clients to pay them when and if they get on with it. I know one tradesman who repeatedly gets bad debts like accolades. Why is that? Just because he cannot bring himself to take the money and lets people intimidate him.
If you allow somebody credit, do it only if they have proven their worth to you by paying cash on delivery (COD) for a while. Secondly, you need to gauge whether they have the resources to pay you - if they don’t then why do business with them. Don’t trick yourself into the pattern of “I need the work” or “I need the sales”. It’s damaging to do the work or providing the goods for zero if you are not getting paid.
If you are the kind of person who can’t ask for the payment after the work has been finished, try these cheats:
Tell your customer that when the job is completed, you require cash or cheque. They will likely have it to hand over at completion and you won’t need to request your money.
When you send out the initial quote, make sure your payment terms are plain.
Do up an invoice that has your terms of payment simply stated and send the client the invoice when the task is done. They can review the invoice and generally know they can pay you now without you being required to say a thing. Create a “cruel boss” who may burn you alive if you do not return with the fee for the work.
Arrange with your banking to have you running with Merchant facilities so you can accept credit cards like Mastercard and Visa. Many people utilize credit cards and it would stop the problem of the customer not operating a cheque account or not having the cash in their wallet.
Otherwise, don’t be frightened to keep your goods till after the payment has been made. Know, until they have been paid for, they remain yours.
If you decide you’re going to give a client credit, be sure you get the following details about them a week 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
After you possess all this detail, telephone the bank branch and make certain that they do have an account with them. Then, contact each of the 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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