Getting paid for work completed is one of the real challenges faced by business owners. It’s costly, timely & an unpleasant aspect of business. We would all rather be doing something else than “chasing” money. As an old boss of mine once told me, “the job isn’t complete until we’ve been paid.”
Below are a few tips which will make the process easier.
- Be Clear on Terms & Conditions: Quite often, the one factor a business owner and their client will agree on before commencement of the job is the Price. Business’s that have problems with their debtors typically have NOT also included a discussion on payment terms. The price & the terms go together like hand in glove. Terms should ideally be written and also discussed before the project commences. This reduces any potential confusion.
- Ask for Progress Payments: Progress payments for larger projects are a great way to ensure debtors are well managed. This ensures that you as the business owner are not financing the whole project. It’s also a way of establishing if the customer is serious. If they baulk at making progress payments, then chances are they will baulk at paying you when the whole job ha been done. It’s better to find this out earlier than later.
- Do a great Job and ask for feedback: It might sound obvious, but the best way to get paid is to do a great job. Exceeding your clients expectations will mean they should be more than happy to pay. Asking for feedback allows your client the opportunity to express any dissatisfaction and provides you with the opportunity to rectify. Once the client has given the seal of approval, the discussion can then move to payment without the quality or completeness of the work clouding the issue.
- Expect to be paid: Be respectful, but firm. Many business owners are scared to ask a client. If you have agreed the terms, done the work and confirmed that the work has been done to the desired standard, then you have the right to expect to be paid. If your attitude says you are accepting of being paid slowly, your client will pick up on this. Show a controlled , respectful manner, but be firm.
- Systemise your Procedures: Many business owners treat their debtors on an ad-hoc basis. They’ll chase the money when things are getting tight. The better answer is for a system to be in place that documents every stage of a collections process.
- Train your team: Systems and procedures are only as effective as the people who administer them. Training your team in systems and procedures increases your chance of success. Slow payers will use all sorts of excuses. Role plays are a great training tool.
- Measure your collections performance: If getting paid is important to the success of your business, then measuring the effectiveness of your collections would be worthwhile. Tracking the average debtor days can give you as the business manager an idea as to how this aspect of you business is performing. It also allows you the opportunity to benchmark against best practice or industry standards.
- Make it easy to get paid: There are numerous was to pay bills these day - Cash, cheque, direct deposit, BPAY, credit cards. Your client shouldn’t have to go searching on how to pay. Eftpos/credit card facilities are very affordable – Less than $50 per month.( Mobile credit facilities are also readily available & are almost a must have for clients such as plumbers who may be attending jobs on-site. These address the age old excuse of “I don’t have any cash on me?”.)
- Some Businesses will pass on the additional credit card commission charges. This is up to the business owner. Personally, I don’t think it’s a great idea. Why give a customer another excuse to not pay you ? The cost of chasing money is usually significantly more than the nominal extra charges incurred.
These are some of the strategies which I have seen work across a variety of industries. What works for you and your business? If you’d like some assistance to help your chances of getting paid, please give us a call on 4351 2622.
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