Your Business Angels - Collecting money

Collecting money


The very first thing I hear from any client (and I mean each client) is when I challenge them about how they write quotes and how to collect money, I hear the same.

“That’s not how it happens in our Industry.”

And my least favourite and one I hate the most.

“My clients won’t like it”.

We live in difficult times, and the most important thing for any business is to make a profit (have more cash in every job you do than what it costs you) and have the cash rolling in for the work.

That means that the quote, the work or whatever has “how I will get paid” clearly in the document.

And, here is the big and, if you are given a contract to sign by your client (a big company that is, say, developing a site), you pass that straight on to a lawyer and ask, “Are the provisions for payment clear, do they follow State and Federal legislation so I won’t get screwed, and in the document where can I get hurt?”

Then you do a credit check and don’t start work until it’s all clear.

There are just too many large businesses – especially in the construction industry taking a dive, for you not to do this, firstly with a lawyer and then with a credit agency. Trade contractors etc., have this strange idea that lawyers are a waste of money – till they are financially hurt.

Every contract read should be a built-in cost; having every large client for large jobs credit rating checked should be a built-in cost.

Otherwise, set your term.

I have a client (and I hope he doesn’t mind me using him as an example) who is an architect. Busy, busy – because he is respected in his area and has endless referrals.

My first problem with this client is that he is at least charging only 25% of the going rate (no, I won’t give you his name for this, not until I get him to substantially up his fees, but then he will probably be under the market) but also that he says he charges as the industry does.

My answer to that is, “You are the industry, and you set the terms”, which is to write the scope, ask for 40% upfront, and to be paid on weekly payments over three months, not when someone at the council gets off their chuff to stamp a form or a builder starts.

His debtor’s ledger is littered with part and messy client payments and is well beyond control.

My advice to any client

  1. Be clear about how you get paid.
  2. Get the deposit – before you start (plus materials)
  3. Stay ahead with payments ahead of your work.

This means you can focus on the work and not the money; money must be sorted the work (and did I say charge more in these times).

Another thing – do not give consumers credit. Business to business, yes, but consumers they must pay upfront and stay ahead. The legal opportunities to chase a consumer and small compared to a business.

So, I already hear you telling me I don’t understand because “it’s in our industry or my clients won’t like it”, but I think I am right in my advice – because I have been working closely with trades businesses for 28 years and guess what happens to those businesses that listen…………………

Serviced by related company Fresh Number Pty Ltd

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