Issue link: http://psai.uberflip.com/i/889227
W EEKLY EDITION OCT 18, 2017 Getting Paid: Part I …continued By PSAI Ex ecutive Director Karleen Kos Either way, make sure you are clear in your agreement about what happens when payment is late. For instance, if the customer doesn't pay within 40 days, they get a late fee; at 60 days late, they lose service – and so on. Figu re out something that makes sense for your company and area, implement it with new customers, and stick to it. You can also phase it in with existing customers over time. These terms can be tailored to the company as part of your negotiations. You can also consider charging a deposit. You can also charge a deposit before starting any work, turning down customers who don't seem like a good fit. This is often evident from the start; if there is an issue with down payments, there will likely be issues with f uture invoices. As one owner observed, "If a [customer] refuses to pay a deposit, then I immediately know not to work with them, even if they beg later on." Reasonable people don't balk at reasonable business terms unless there is a reason that is probably not favorable to your business. • Pre - payment. For smaller rentals and extremely chancy accounts, get full payment up front. It may seem strange to ask for it, but it really isn't. Just make it part of your routine when they sign the rental contract or cal l in the order over the phone. People are accustomed to paying for many services up front. Ever fly on an airplane or attend a sporting event and get an invoice later? Of course not. If someone questions a prepayment policy, it is going to be for one of two reasons: (a) They don't trust your company and want assurance that you'll deliver as promised. In that case, offer them references. (b) They don't actually plan to pay you – or they can't pay you. Let's face it. In this age of credit cards, most people could give you a card for a small rental unless they are totally maxed out. If that's the case, they probably won't pay you on an invoice later. YOUR PROCESSES Whatever your policies, they won't do you any good if you don't have the administrative system s to back them up. Here are the things you should put in place to ensure customers know what and when to pay you. • Bill promptly. For you, the receivables clock starts ticking as soon as you deliver a unit or service. For the customer, it doesn't start tic king until they have an invoice in their hand. If you are a mid - sized or larger company, sending customers a timely bill is probably a no - brainer, and you are confident that your team member in charge of accounts receivable is on top of things. If you ar e smaller, you may sometimes feel pulled between being out on the truck doing service, selling to new customers, and collecting from existing ones. The struggle is real. So are its consequences. If you don't bill in a regular and professional way, you'll b e seen as unprofessional. In addition to giving customers the impression they can be equally informal about paying you, failure to bill regularly and professionally will bar the way to growth. You'll find you lack both cash that is owed by current customer s and the credibility you need to win new customers. PAGE 3 CONTINUED ON PAGE 4