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Getting Paid Sooner – are you getting in your own way?
It’s always good to get your money in sooner rather than later and we all know the truism that cash flow is king. So why is it that so many of us allow poor habits to slow down our cash flow?
Are you scared of your customers calling you a capitalist pig or something? Scrooge?
It feels that way, sometimes.
Two contrary examples come to mind:
Example 1 – Frustrated Michael
Michael runs a digital marketing business, successful and innovative, he and his team build marketing and lead generation websites that really do bring business in, that look beautiful and are functional.
When they win a job, they take a deposit and the remainder in completion. Now when a website is built, some work has to be done by the client and we all know how quick we are at things like writing, so they can really blow out.
Michael has left his cash flow at the mercy of slow customers. Not ideal.
When I bought my first website, back in 2006, the developers said “Thanks for giving us your business, Jon, now just pay all the money into our account and we’ll get started”
And I did (I wanted a website, didn’t I?)
So why can’t Michael do something like this? The answer, of course, is that he can but he’s letting himself and his own fears of being called a mercenary bastard get in the way.
A compromise (if he can’t bring himself to charge 100% up-front) might be to charge in 3 payments – 30% deposit, 40% after two weeks and 30% after 4 weeks – regardless of whether the site is completed – I see no reason to wait until the end of the project until he gets paid – I was happy to pay up front.
Example 2 – TV Repair Shop Byron Bay
Our TV broke the other day, screen gone black but we can hear the sound. Not great for Netflix.
When I took the TV into the repair shop and handed it over, the guy said “It’s $80 for us to look at it and we’ll give you a quote for the repair” and he reached for his EFTPOS machine!
So I reached for my card and paid him his $80
Who’s doing it right? The TV guy.
What are your payment terms? Do you take your money at the earliest opportunity (before your customers get what they want is best) or do you let your fear of being called a Scrooge make you give your customers free credit terms?
I’ll give a free 10 minute chat to you if you want to talk through how you could change your trading terms. Either book it in on Schedule Once or call me direct.
There are four ways you can engage with me:
1. Subscribe to these emails and get them once a week in your inbox so you never miss a video from me.
2. Join the Trades Business Toolshed Facebook Group where you can watch these videos, ask me questions or talk to your peers.
3. Attend my next Tools Down workshop.
4. Book yourself a 10-minute chat with me. We’ll talk about whether coaching is right for you now and if it is, we’ll go further into the process before you have to make your mind up.
See you later.