No matter the size of your business – facing unpaid invoices and bad debts is a very real scenario
For small businesses, sole traders and tradies across Australia – the threat of bad debt is even more pressing. Research shows late payments are often the number one problem this category of business faces – and unpaid invoices are becoming significantly more than just an inconvenience.
There are a range of practical steps that all businesses can take to avoid bad debt, ensuring invoices are paid in full, and paid on time. I have compiled my top three tips that you can start implementing today – avoiding even one more day of unpaid debt.
Tip One: Get An Agreement
It’s crucial that you get an agreement in writing, and get it right. Many national small businesses and tradies don’t have a formal agreement or contract process – leaving them without clear terms and conditions for the job, and no solid ground to follow-up on late payments. Another hot tip: swap out the word ‘estimate’ for the word ‘quote’ when providing an overview of any job to potential clients.
Tip Two: Align Your Terms Of Service With Your Business
Ensure that the terms and conditions of any contract or agreement truly meet your business needs. Take care to draft your own contracts, read third-party documents thoroughly, and have them double-checked professionally if you’re ever in doubt. Be sure to also add any potential collection fees onto the cost of the quote.
Tip Three: Value Your Products And Services
In small business and as tradies, it can be hard to put a price on our products and services, to the end that we keep our business needs as a priority in our transactions. Be confident in your business offerings – never be afraid to ask a client for a deposit (especially if you have high costs-of-goods sold) and then back yourself to deliver on the quote.
There are small changes every business can make to avoid the possibility of bad debt altogether. Be sure to prepare, stay attentive, be confident and remain patient to work through every quote, contract and agreement thoroughly – putting yourself in the best possible position of getting paid on time, and getting back to doing what you do best.
James Stewart is a Managing Consultant for Australian debt specialist Bill Chaser Pty Ltd