Let’s be honest, as a tradie in business getting clients to actually pay on time can be a nightmare. It’s even worse when you have to waste valuable time chasing those payments.
So how do you cut down on the stress and management of late paying customers?
Check out our tips.
For some tradies in business, sometimes cash doesn’t quite make it to the bank business account or financial accounts…
It seems from an initial perspective that this cash is beneficial in a number of ways. Yes it is great to have cash in your pocket with immediate purchasing power. Whilst this cash can be used for a bite to eat, buy whatever you need, clothes, or for a short break somewhere. Sometimes there is the view that the taking of the cash means a reduction in turnover which in turn reduces profit and taxes.
But there is a downside and it tends to comes much much later in a number of ways. Usually the first thing is you need to go to the bank for a loan or to roll over your existing facilities with the bank. The result here is you fail to get approval from the bank or the interest rate you are offered by the bank seems too high. In some cases we are seeing people pay between 3% to 5% more than they should for their business funds because their financial accounts from their accountant do not show a strong ability to service the loan facilities you require.
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As someone who speaks to tradies regularly I bet I can guess what the worst part of your week is…. Having to chase up your outstanding accounts. It can be a time consuming and pointless exercise where you end up feeling frustrated and powerless right?
The good news is that if you don’t like the hassle of chasing bad debts there is some light at the end of the tunnel. Implement these three tips and get on with what you do best – making money, not chasing it!
The number 1 reason tradies have trouble when chasing their debts is from doing business on a handshake. The days of the old handshake are, regrettably, long-gone. By putting in place a set of Terms and Conditions of Trade that sit on the back of your quote, for example, you have a legally binding contract that you can fall back on if things go pear-shaped. The Terms and Conditions of Trade contract should set out the rules of doing business with you and the consequences (your leverage) if the rules are broken – ie. Your client doesn’t pay. You need to think of your business as a bank, start acting like one. It’s amazing how quickly you will become a priority to pay.
The main cause of disputes for tradies happens when the client or their partner asks you to do additional work to the original quote. Feeling they need to maintain the “goodwill” status quo the tradie proceeds to carry out the extra work on a verbal authorisation. When the client gets the invoice for the additional work it turns into a “he said-she said” argument on what was and wasn’t authorised and what was included and excluded from the original quote. A paper trail is always best!
If you have a debtor who is refusing to pay, after having sent the invoice and a friendly reminder, you need to escalate quickly. The quicker you take action, the more likely you are to get paid. Point out a reasonable time frame and deadline to your debtor for payment and the consequences if they fail to meet the deadline. If and when the deadline expires you need to act immediately and escalate to a debt collection agency.
As a tradie in business, if you can stick to this formula, you will be able to watch your cash flow grow and your free time return.
Contact us at Tradebusters for a FREE Tradie Help Consultation. We have specialist solutions for trades including Website Design, Local Area Lead Generation Strategies, Social Media and Marketing Support, Business Coaching and more. Contact us today.
This is something really common that I hear from tradies. Most of you probably have a Super fund account with CBUS or something similar. It is great that these super funds provide some insurance inside super but I’m worried about 3 key areas: Read more
There are a lot of insurance companies out there and some specialise in trades insurance packages. The reality is you will need insurance for your business from the onset, however you will need to sift through the packages and find one which suits your business and your needs. Insurance is here to protect you so you are not caught out without the right cover in place. To make life easier for you, we’ve outlined some of the most common insurances that tradies need below.
The Federal Budget announced in May 2015 a number of changes that could impact your trade business.
Unfortunately sometimes it happens. Good honest tradies fail to get paid for a job well done. There are a number of reasons people try to avoid paying you for your work, but today, we will be discussing the best ways to protect yourselves from non-paying customers.
We spoke to some of our experienced contacts working in debt collection agencies in Sydney about how you can protect yourself against non-paying customers. Read more
Because it’s the only insurance that protects you for damage to property or injury to a person if you’re found liable following a claim. It will also cover legal costs if you need to hire a lawyer following a claim. One of the most common questions tradies have is how much cover you need with Public Liability Insurance and we’re here to give you the lowdown.
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Whether you want to start a new trade business or you need funds to expand your existing business, small business loans are a necessary part of your journey and growth. You may need money for new equipment, tools, work vehicles or simply to manage your monthly cash flow cycle. Having a good Finance or Mortgage broker by your side that understands tradie business needs is key to helping you achieve your short and long term objectives. Read more
If you are a builder or tradesperson in NSW, the recent changes in the home building laws may impact your compliance obligations as a business operator. These include licence requirements, insurance coverage and even the contract terms and conditions you use each day in your business with clients.
