During the busy times, you may get by and are probably too busy to chase the outstanding money. And when things slow down, it is nice to know that there is a lot of money still coming in.
Now look at your business, do you have an overdraft? Are you paying off a credit card? Why would you pay 17%-21% to the bank in interest charges, while your customers owe you money?
Every $100 dollars owed to you cost you $20 per year. Say you make a profit on a job of 40% after material costs and wages, you immediately lose half of this profit to bank charges. Trouble is, not many have a GP of 40%, because they do not charge enough. "I needed the job so had to drop the price" is a popular excuse. My question here is simple: Don't you think the job you do and materials you use is worth it? I do not see many businesses in window tinting listed under "Charity". A business needs to return a profit to the owners. It is this profit which pays the bills, wages and physical and mental health of the owners.
How many businesses are sold because of ill health? It is not always the physical health, but the health of the business.
So, chase those debts. Make it easy for your customer to pay you, offer credit card payments, have postage paid envelopes and encourage Internet banking. After all, it is your money!
Only a sound business can stand behind its products and services long term. We've been standing behind ours for a long time.
No comments:
Post a Comment