If you own a small trades company, it can be hard to make sure that you get paid on time, particularly if you are dealing with small builders who may not have refined administration processes. Here are some tips to make sure that you get paid for your work.
Ask around for advice on the company
If you get asked to do a job that sounds to be a little to good to be true (such as one that offers very high rates), it can be worth asking other tradespeople to see if they have specific experiences with this company or the owner. In some cases building companies have 'phoenix' structures where they regularly bankrupt the company then restart it under a new name. This allows them to avoid debtors and start business with a fresh credit history. A high daily rate can be an indication that other people in the industry are looking to avoid the owner or company due to their business practices. Make sure to work with reputable companies that are known to pay for the work they receive.
Ask for some money upfront
When starting the job, it's reasonable to ask for some money upfront as part of the deposit. You can draw up some sensible service payment terms and conditions setting out at which point you need to receive a deposit in order to start work, as well as at which point the rest of the payment becomes due. You can often find templates online from debt collections agencies, or, if you have a specialized business, it may be worth contacting a lawyer for a specialized set of terms and conditions.
Use a debt collection agency
If you do have work that has gone unpaid, it's sensible to chase these debts even if they are for relatively small amounts. This can indicate to prospective clients that you take unpaid debts seriously and you are prepared to ensure that any debts are paid. It can often be a sensible business decision to engage the debt collection agency at a relatively early stage, as this can leave you free to concentrate on chasing new profitable work and completing jobs rather than wasting time on chasing reluctant clients for payment.
If you are a tradesperson, it is a good idea to spend some time working out sensible strategies, such as having clear debt collection processes, researching your clients before you sign on to jobs and requiring money upfront so that you get a strong reputation for collecting that which is due to you.
Share22 July 2016
As the old saying goes, "you have to spend money to make money", and in this blog, I am going to help you see how and when that platitude applies. Hi, my name is Penny, and I love to write. My second favourite thing is to think and strategise about money and finance. In this blog, I am going to explain finance in ways that I hope are new and interesting to you. I studied accounting at uni but verged away from that to start my own consulting firm. I work from home, and I am bringing you this blog from my home office. Thank you for reading!