Nothing can drive a business down faster than customers who don't pay their bills as agreed. When you sell to customers on credit you are making an agreement with them. You will provide them with goods or services in exchange for their payment within the terms you agree upon. Period.
What I'm seeing more and more of is businesses using their suppliers as banks. Taking 60-90 days or more to pay a bill is becoming more and more common. I've seen some business owners shrug their shoulders and just accept that nothing can be done about it. That's just the way it is.
Naturally, I disagree with that approach. The reason you grant credit is to increase sales. But, the sales you want more of are the sales that pay and don't drag your business kicking and screaming into the Cash Flow Swamp.
So, what's a business owner to do?
Late paying customers can create a serious threat to the survival of your business. Whether you're just starting out or you've been in business for awhile, it's a critical business function to develop a solid plan to get paid.
Here's an example of a solid plan:
You decide your business will not grant credit. You decide to be paid up front before you provide services or products. You get set up to accept credit cards or use Paypal (or both). You communicate in no uncertain terms (nicely but firmly) what your payment terms are. You explain that payment is due before (or at) the time of service or purchase and that you accept cash, checks, money orders, credit cards and Paypal. Period. Then, you stick to it with no exceptions. You make that a condition of doing business. Communicate it firmly and respectfully. Don't waffle or apologize. People who take advantage of others can sense weakness. So can people who always have a tale of hard luck and woe. It's human nature.
Remember, late paying or nonpaying customers are endangering the survival of your business. These are not the customers you want to do business with. You'll have nothing to show for your work but stress and poverty. If you want to do some of your work for people in tough situations, donate your time but do it with the understanding that the majority of your time has to be spent on work that pays.
If you're working on a big project, set the expectations before you start so that a condition of doing the project is incremental payments. A percent before you begin, a percent during the project at specified intervals, and the remainder due on completion. This gives you the option of stopping work if you're not getting paid.
As with all areas of business, the best Defense is a good Offense. Set the standard for how you'll be paid, communicate it, and stick to it.
Caroline Jordan is a small business mentor and consultant helping small business owners understand, diagnose, and improve cash flow in their businesses. For more information and resources to improve cash flow visit http://www.thejordanresult.com/mastering.html.
housekeepers near Park Ridge ..1. Everyone Makes A Difference ? Despite not letting him... Read More
Discover How Specialized Cost Containment Creates A New Win-Win Position... Read More
Many smaller businesses choose niche markets for various reasons and... Read More
The FTC Franchise Rule maybe changed, as the Federal trade... Read More
Ask anyone trapped in a cubical about their entrepreneurial dream... Read More
If you're just ramping up your small business email newsletter,... Read More
Writing a business plan is a fundamental step to ensuring... Read More
Technical writing services are employed to explain the details of... Read More
Every business plan book tells you how the Executive Summary... Read More
Many of our nations 400,000 franchisees run their businesses out... Read More
First, we need to define the different kinds of skip... Read More
If small business had no important outside audiences, it wouldn't... Read More
Managing cash flow is every small business owner's most important... Read More
Consistency is a huge word when operating your business. I... Read More
The easiest way to lift profits is to cut the... Read More
If you are in the pressure washing business and are... Read More
A suggestion box is a really good idea for your... Read More
Why do you need an account plan?When you first decide... Read More
Which questions do you need to ask to even get... Read More
Your business account comes with an ATM, Debit card. Pick... Read More
Q: I have outgrown my home office and need to... Read More
TACTIC #1 -- Never simply slash your prices, unless you're... Read More
If you plan to do business online, then your website... Read More
Why does a good business relationship rely on having some... Read More
Gather round while I tell you the story of Kennebec... Read More
scheduled cleaning services Mundelein ..What does it take to grow a business and run... Read More
One of the first things you will need to set... Read More
There's no question that hard work and a little luck... Read More
The less a business pays for goods and services the... Read More
When we speak of branding most of the time people... Read More
Business owners rarely go into business to deal with the... Read More
Business consulting opportunities might be just what your are looking... Read More
By outsourcing to skilled professionals you'll be able to grow... Read More
Quality control in franchising companies is paramount and all franchising... Read More
Before you want to build your business, you need to... Read More
You know what makes me really happy? Drinking a Starbucks... Read More
Why are Chambers a good launching pad?Chambers provide you with... Read More
Many ventures are faced with the challenging task of raising... Read More
Small business owners often enter their field with great expectations.... Read More
Forget everything you've ever heard about the U.S. Small Business... Read More
Starting and managing a small business is no fun chore,... Read More
Running a business on the net these days can be... Read More
After over 30 years of participating in hundreds of businesses,... Read More
Here are just a few ways to increase and diversify... Read More
The goals of businesses have undergone much evolution from the... Read More
Obtaining a business credit card enables the small business owner... Read More
Over regulation of small business is so intense it is... Read More
Here are a few tips on how to hand out... Read More
When small businesses fail, the wreckage is often assigned to... Read More
What is a guru?A guru is a teacher. A mentor.... Read More
Small Business |