Getting paid in your business is a problem for many business owners.
The key is controlling your debtors.
Your debtors are who owes you money. In other words, who is in debt to you. Your debtors being high or low determines if you are getting paid in your business adequately.
Especially in tough economic times, such as we are just coming out of, debtors can dramatically exceed comfort levels.
When your debtors blow out – when too much money is owed to you – your business cash flow will runs into trouble.
1. Get the scope right for your customer
Starting with the beginning of a job, the scope sets out the work you will actually be doing.
Your service will be solving some sort of problem for a customer, and you need to outline clearly what that service actually is.
Not only do you need verbal agreement, but written agreement helps too.
Your customer needs to really understand what they are buying. If they do not understand what they are buying, there might be a dispute later on and they take issues with paying.
The first step to your customer understanding what they are buying is a clear and well communicated scope for the work.
If a dispute arises, it is important your written agreement and the scope of the agreement supports what you are owed for your debtors.
2. If a customer stops paying you, stop doing work for them
No ‘ifs’ and no ‘buts’.
If you have clearly agreed on a scope with your client and they are not honoring the terms, stop doing work for them.
You will go broke if you do work for customers who are not willing to pay you.
You might be surprised with how many people keep working for people despite not being paid for it. Employees understand this, but as business owners we need to as well.
As business owners we don’t like to let our customers down, but you’ll be letting your business down if you continue to do work for customers who do not pay.
3. Use the PPS registration system in your terms
Your terms of service will determine the level of security you have over getting paid.
Good terms will mean in the case of a dispute you will be secured. Bad terms will mean the opposite and you may not get paid.
PPS registration is the official government register of security interests in personal property. The PPS registration system includes debts or other obligations that are secured by personal property.
By using the PPS registration system in your terms, you will dramatically increase your chance of getting paid in your business in case of a dispute.
If you would like assistance with getting paid in your business and reducing debtors, get in touch with us below.I’m interested in business help