Rule One of Business: Get Paid
To be paid, like you would imagine is essentially fundamental in your business because if you are not paid, why are you in business?
You will be astounded at the heaps of business people who have their clients to pay them when and if they feel like it. I know of a tradesman who persistently holds bad debts like weeds. How is that possible? Probably because he can’t bring himself to request the payment and lets people take advantage of him.
If you give someone credit, do it only because they have proven their integrity to you by paying cash on delivery (COD) for some period of time. Furthermore, you need to see whether they have the money to pay you - if not don’t do business with them. Don’t kid yourself into thinking “I need the work” or “I need the sales”. It’s damaging to do the work or providing the goods for zero if you aren’t getting paid.
If you are the type of person who can’t demand the payment when the service has been finished, try these ideas:
Tell your client that when the job is done with, you need cash or cheque. They should likely have it ready at the transacation and you do not have to ask for your money.
When giving out a quote, make sure your payment terms are simple.
Create an invoice with the terms of payment clearly printed and hand the customer the invoice when the work is completed. They can look at the invoice and reactively understand they should pay you the money now without you having to say a thing. Invent a “cruel boss” who will torture you alive if you don’t bring back the payment for the service.
Ask your bank to provide you with Merchant facilities so you can accept credit cards for example Mastercard and Visa. Many people own credit cards and it should prevent the dilemma of the customer not holding a cheque account or not having the right amount of cash in their wallet.
As another option, don’t be persuaded against to hold onto the goods til the payment has been made. Remember, until they’re paid for, the goods remain yours.
If you decide you’re going to allow somebody credit, be sure you get the following information about them a week BEFORE you permit them credit.
- Name
- Address
- Phone number
- Bank name and address
- Account no.
- 3 trade references with their names, addresses and phone numbers
When you have all this information, contact the banking institution and make certain that they do have an account then. Then, call each trade reference and inquire if they pay their fees on time or if they have had 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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