A Southerly weather change blew through the streets of Kaikoura last week and prompted many to reach for the “beanies and puffer jackets”. Here was I dressed like a “Nelsonian on a Summers day” and not prepared for the cool climate change.
In hindsight I should’ve studied the forecast and planned my wardrobe accordingly. Hindsight is a fine thing eh? Ask the small business owner who is 6 months late with a $20,000 customer payment.
The thing that makes him say profanities through clenched teeth is the fact that he has a “Terms of Trade “document in place albeit six years old but enough to pursue the debtor and recover costs. His jaw is locked tightly because he didn’t get the debtor to sign his original “Terms of Trade” agreement. There was no disclosure.
If we could all be like Dr Who and launch the Tardis, travel back in time and do it all again this is what should have happened. Have the “Terms and conditions” signed by the customer. Have an updated “Terms and conditions” document in place not the ancient moth eaten variety. Why?
Well New Zealand small to medium businesses operate in a changing commercial, technological and regulatory environment, it is the responsibility of the business owner to amend their “Terms and conditions” from time to time as they see fit. It is the responsibility of the customer to ensure that they are familiar with the latest “Terms and Conditions” as they are bound by the “Terms and Conditions” as amended.
It’s got to be one of the toughest things you must do as a businessperson is get paid”! You work hard for your customers to provide them with a valuable service and then spend forever chasing your money. The truth is, many business to business invoices get put on the back burner, because unlike credit card companies who will immediately report the late payer to a credit agency, the smaller business will usually not do this. If you can set up incentives and protections before you even begin the work you will save yourself a lot of time and trouble.
It is important to make your payment policies clear at the time your services are retained. If the customer doesn’t pay be friendly but persistent when collecting the debt. Don’t hesitate to escalate the situation if a customer hasn’t paid on time despite your best efforts with the contract. The challenge is to get paid without jeopardizing your future relationship with the customer.
Have a clear paper trail. Times, dates, contact details so that if you need to hand the debt over to EC Credit Control the chances of communicating directly with the debtor are greatly enhanced. Remember, every minute that you are working to get paid is a minute that you are working a second time for money you have already earned and you are not working on a new job which still needs to be finished on time.
Get your “Terms of Trade” updated if it is old. Once your new documentation is in place implement it effectively, make sure your customers sign, then if any “scallywags” treat you like a bank you will have sound legal contractual rights. When I add up the costs to small business of not collected costs over and above their original debt it leaves me “gobsmacked”. Get it sorted and it will put you in good stead in the future!
EC Credit Control