Encouraging Your Customers to Pay On Time

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.

In The News:

---

Everything I Need to Know About Business I Learned From My Nametag

So there I was ? sitting in the audience of... Read More

Starting A Concrete Cleaning Pressure Washer Business

Concrete cleaning can be a lucrative business to start. Here... Read More

Reaping the Rewards of Cost Cutting

In these days of insecurity and uncertain futures, the tendency... Read More

SBAs 8(a) Program Can Help Some Companies Compete

Q: A friend told me that as a woman of... Read More

The Single Most Powerful Small Business Marketing Tool On The Planet

Let me get right to the point. The single most... Read More

Financial Strategies for a Mobile Car Wash Business Plan

Writing a business plan for a mobile car wash is... Read More

Patient Records - Your Responsibilities

As a practise gets larger & larger the associated problems... Read More

The Game Plan ? The Difference Between Small Business Success And Failure

It is an American dream to own a business. But... Read More

Three Big Barriers To Small Business Marketing Success

When you feel like you're always busy working on your... Read More

Franchising VS Business Opportunity; What is the Difference?

The modern Franchise business model and the much different business... Read More

Big Successes Never Happen Overnight

Treat your business as a serious, full-time business and be... Read More

Where Can People Find Information About Starting A Business?

Approximately 200,000 new businesses are started each year. More people... Read More

Start a Technical Writing Service

Technical writing services are employed to explain the details of... Read More

Who Makes the BEST Business Partner

How do you find the best business partners?Finding a good... Read More

Earn More Money in Your Small Business by Creating a PIG

If you really want to earn more money with your... Read More

1-2-3 Steps To A Successful Joint Venture

A successful joint venture marketing effort is the goal of... Read More

6 Ways Small Businesses Can Survive In A Crazy Economy

Contrary to popular belief, small businesses can survive a crazy... Read More

Power Tools for Business

How do we keep track of our business deals?If you... Read More

Getting City Contracts; Local Government Contracting

All cities have a purchasing office and/or a procurement officer.... Read More

Do I Have to Do EVERYTHING Myself?!

The air in my client's office nearly crackled with her... Read More

Provide Affordable Health Care To Employees At Little To No Cost To You

You can provide affordable health care plans to your employees.... Read More

Starting a Small Business: Balancing Risk and Reward

In a perfect world, starting a small business would be... Read More

How to Effectively Design Your Business Image

In many industries, image is one of the last things... Read More

A Gift Basket Home Business is an Easy Way to Wrap up Profits

You want to know more about making money with your... Read More

Top Ten Tips for Leveraging Conferences for Big SUCCESS!

As I am preparing for my attendance to the CoachVille's... Read More

One Of The Best New Business Opportunities May Be Right In Your Home - A New Daycare Business

The day care industry is expanding. There are now more... Read More

Be Prepared When Business Investors Look Beyond Your Business Plan

You have spent considerable time pulling your business plan together,... Read More

Entrepreneurs Go Virtual!

With the massive explosion of start-ups and home businesses developing,... Read More

Top 7 Small Business Resources for 2005

If you want to start a business in 2005, and... Read More

Small Business Owners - Form a Relationship with Your Bank Manager

It's just like a marriageTo expect a bank manager or... Read More

A Look at Small Business Incorporating in Florida

The choice to incorporate a small business in Florida has... Read More

Mobile Car Washes and Shoe Policies

Mobile carwashing is hard work, it is tough on the... Read More

Taking Stock

Back when I owned an inventory-based business, one of my... Read More