The Tradie's Guide to Getting Paid On Time
There's nothing worse than putting in the hard yards on a job only for the customer not to pay you on time, or at all. So what can you do to get paid faster with less hassle?
1. Know your customer
If you are sub-contracting to another business, check that the business isn't insolvent for free using the ASIC website (https://insolvencynotices.asic.gov.au/). Also consider purchasing a credit report using a service such as http://www.veda.com.au/swiftcheck/ (costs around $20).
If you are dealing with an individual you can also consider running a credit check using similar services.
Pay attention to how the customer found you. Were they referred by someone you know who has worked extensively with them before? Or have they walked off the street because no one else will work with them due to their poor credit or work quality?
2. Get your work and credit terms documented and agreed to
Consider having a formal credit application that your customer signs. This shows professionalism and leaves your customer with less room to hide if payments become disputed. The application should have a credit limit that you set to manage your risk profile.
All work you perform should be invoiced as soon as possible, preferably on the day and then signed for by the customer before you leave site to avoid disputes.
3. Ask for a deposit
A lot of customers will push back against paying upfront for work by tradies and builders. Nonetheless it's worth asking for a 50% deposit. This leaves both sides incentivised to finish the job.
4. Have your customer pay for the building materials up front
A lot of customers won't pay a deposit and asking for one can be hard early on in the relationship.
Many of MaterialsLink's customers have found that asking customers to pay for materials up front is a better solution. This is easier to ask for because the money isn't going to you— the customer pays large building materials suppliers directly through MaterialsLink's online payment gateway for a product they then see on site.
This ensures that, in a worst case scenario, you're not left having to pay for thousands of dollars worth of materials in addition to your lost time.
5. Don't incur new debt until old debt is paid for
One of the most common issues tradies run into is continuing to work for a customer while still chasing old debts. Unscrupulous suppliers exploit this tendency to get even more work without any intention of paying for it (or at least paying in full or on time). The most valuable leverage you have is stopping work until an account is settled.
6. Follow up on time every time
Two days after a customer fails to pay an invoice, call them and follow it up (the funds may be clearing on the first day!). Where they indicate they can't pay it all today, ask for a partial payment immediately (preferably more than half) with the rest to follow at agreed upon intervals.