Honest Tradies and Getting Paid for a Job Well Done
Unfortunately sometimes it happens. Good honest tradies fail to get paid for a job well done. There are a number of reasons people try to avoid paying you for your work, but today, we will be discussing the best ways to protect yourselves from non-paying customers.
We spoke to some of our experienced contacts working in debt collection agencies in Sydney about how you can protect yourself against non-paying customers.
5 Ways to Protect Against Non-Paying Customers
- Signed Contracts and Terms and Conditions
Make sure you use a contract with clear terms and conditions for each and every job you do. Go over the contract with your clients, explaining the terms and conditions and aspects of paying for services rendered including when payments are due, before they sign and make sure you have those signed contracts in place and properly secured.
- Ask for deposits and instalment payments
Particularly for larger jobs, don’t risk it by only asking for payment at the end of a completed job. In NSW for example, you are entitled to request a 10% up front deposit, and as soon as work commences progress payments based on work completion. This means even within a few days of commencing a job you could be able to claim another instalment payment, e.g. 10% or 20% of work completed. It also means that if for whatever reason the customer does not pay you for that instalment, you can cease the job at that point.
The schedule of payments and what milestones should be achieved at each point in order to be paid should be contained within your contract and terms and conditions. You may need to speak to a lawyer or terms and conditions payment specialist about how you can best structure this within your contracts.
- Include penalty clauses in your contract terms and conditions
Include a penalty clause in your contracts, meaning if a customer fails to pay you they could be liable for extra penalties like interest or legal and debt recovery fees. Explain these to your customers and make it clear what will transpire if they fail to pay for services. You can do this in a nice, but firm way. The beauty about penalty clauses is that you don’t necessarily need to enforce them but having them there could be enough to make some customers think twice about delaying or coming up with an excuse to not making payment.
- Issue your invoices quickly, and follow up on non-payment
Unfortunately with some tradies, they do not always invoice promptly when the work is completed. We have heard of cases of tradies issuing invoices 3 months after a job is done. The risk with this is obviously with time passing, customers may leave the area (or the country) or come up with an excuse to not pay due to the time lag. In addition, you should be diligent in following up payments, as soon as they are past the due date.
You can issue statements and payment reminders from many accounting systems.
- Get yourself a credit card facility
Yes, even for tradies! These days with various credit device products available, there are more and more tradies offering credit card as a preferred payment option, meaning immediate payment in the customer’s home as soon as the job is completed. Great for electricians and plumbers, especially if you have a large team out and about each day: you can give them a device each. Whilst there is a credit card transaction fee associated with each transaction, it may well be worth it if it means getting paid immediately and not risking late payment, no payment, and time on follow ups.
Need Help Finding the Best Debt Collections and Term and Conditions Specialists?
As you can see having solid contracts and terms in conditions in place is the first step toward protecting yourself against non-paying customers.
If you don’t have your contracts in place or feel they may need more work, you can start here. You can try contacting service providers like debt collections, terms and conditions specialists, lawyers, and accountants from our Tradebusters Academy network. They all have a specialty in dealing with tradies and helping those in the trade and construction industry succeed.