Issue link: http://psai.uberflip.com/i/889227
W EEKLY EDITION OCT 18, 2017 Getting Paid: Part I …continued By PSAI Executive Director Karleen Kos Whether your numbers are better or worse than these the question is this: how long can you afford to carry you r customers' debt? Large companies and government agencies tend to be the worst about paying on time, but they are certainly not alone. It just isn't possible to avoid doing business with everyone who might pay late. So what can you do? Here are some sug gestions, which we have gleaned from some of the best writing on the topic as well as the input of portable sanitation leaders at past round tables on this topic. UP FRONT PAYMENT DECISIONS AND CUSTOMER COMMUNICATIONS One size does not fit all when it co mes to contracting with customers. Still, there are some practices that make it far more likely you'll collect what is due to you. • Get the data, then decide. When taking on a new customer you should check the company's credit rating and payment history. T his costs about $62 at Dun and Bradstreet or as little as $15 from other sources. You might not do a credit for a one - time weekend rental, but it makes sense to do them with companies who will be long - term customers. What you learn from the credit report w ill allow you to tailor your bid and your terms to account for their likely payment behavior. • Use a rental agreement and communicate proactively. We strongly recommend using a rental agreement to spell out the terms of your service, what is expected of b oth parties, and how things will be handled between you if something goes wrong. Before agreeing to provide rentals and service, make sure that your customer is fully aware of projected costs, things for which you charge extra, and what happens if your equ ipment is damaged or stolen. Ensure that you take time to answer any questions. Having this clarity from the beginning will help strengthen a customer's trust in your professionalism, increase their respect, and heighten their commitment to paying the full amount. Then if anything changes along the way, alert your customer in real time so there aren't any surprises when the invoice is issued. • Use a separate payment agreement. Have a payment agreement – separate from the rental agreement - for credit and p ayment terms that can be tailored to your customer. This allows you to offer discounts for up - front or early payments, change your rental rate for companies that will pay late to account for the cost of the delinquency, and to include delinquency penalties that are tailored to the customer. You want to set up policies that will motivate customers to pay consistently and on time. Payment terms that are too strict can lower sales, while those that are too permissive will both lower your actual receipts and tend to attract customers that are poor credit risks. A good rule for contracts is to require payment within 30 days. Portable sanitation companies are divided on whether to invoice everyone from their first date of service (so that you bill multiple time s a month) or to pro - rate the first month's rental so that you are billing everyone once a month. You will need to decide what works best for your business and cash flow needs. PAGE 2 CONTINUED ON PAGE 3