Is your trade business doing well – but just never quite well enough?
Do you find that you’re making a profit on jobs you complete when you look at your year end figures, but tend to be permanently strapped for cash month to month?
If this sounds like you, you would probably agree that a part of your business needs maintenance work.
You’re not exactly struggling, but things aren’t as easy as you’d like them to be when it comes to the money side of things.
Luckily for you, there’s something you can do about it. Something that gives you a bit of predictability and confidence that you can control when you can expect your cash to come in.
We’re talking about payment processes
Before you click out of this blog, thinking that it sounds too hard or too much like something that isn’t likely to work – trust us when we say:
Perfecting your payment process can get your business off struggle street when it comes to cashflow.
It can tell you exactly when you can expect cash to land in your bank account – and speed up the time it takes you to get paid.
But isn't price the solution?
What about my prices or number of jobs – shouldn’t I be looking at those instead to boost cashflow?
You might think that the source of these kinds of financial issues in your business is because you’re not charging enough or just need to do more jobs.
You might be looking to your competitors, trying to match how much they charge. Maybe you have been trying to compete at a different price point, wanting to undercut other businesses in the quest to win more work.
Without looking at your books, it’s hard to say for sure if you need to tweak your prices. A pricing expert or business coach is a great start to help you to perfect your pricing.
Pricing is just one part of your cashflow maintenance plan though. This is because optimising the amount you’re charging is not enough on its own to overcome poor cashflow.
If your payment process is defective or in dire need of some maintenance work, this causes a bottleneck and jams the cashflow.
Basically you are working for free while you wait for your customer to pay you. The longer you wait to invoice and collect payment, the fewer deposits get credited into your business account.
More jobs doesn’t actually speed up cashflow. It simply means that there are more jobs waiting for cash to be collected.
Why are payment terms important?
Assuming your prices are okay and you’re not finding it too hard to win customer work, it’s time to look at your payment processes. A process is a repeatable set of actions that you or someone else can follow to achieve an outcome. For your customer to pay you quickly or on time, you need a clear payment process to get the right information released. Having a process is important because knowing when cash is coming in means you can be confident making business decisions based on solid and predictable revenue.
If you don’t have any processes in place, you’re likely causing problems for your customers as well as for your business.
Poor payment habits
Habits you may be entrenched in could be a problem for your customers too. Here’s some really common poor process habits that Tradie Terms helps our customers to break:
Delay in sending invoices
Delaying sending out invoices for work completed, which in turn delays your customers paying you. Your customers want to know what they need to pay so they can budget and move on with their project.
Lack of communication
Not communicating to your customers when they can expect to be invoiced. Your customers aren’t prepared to pay you when you do send an invoice through and are irritated by this. This makes them more like to pick holes in your invoice as they’re not in the correct mood to pay you.
Unclear process for variations
Not making changes and variations clear. A really similar theme to above. Lack of clarity creates confusion and this presents as irritation and annoyance. The net result is that your invoice charges are questioned line by line.
Beyond these problems, there could be even more issues that stem from having no processes when it comes to getting paid.
What can I do about it?
Common impacts we see with our Tradie Terms customers of persisting with these poor process habits are:
- Getting distracted by customers raising queries means you could be getting behind in dealing with customers who are good payers.
- Starting to believe that the customers who ask a lot of questions are 'difficult' when in fact, they're just under-informed
These customers might otherwise be very happy to pay you on time, if only you had invested the time to build a clear communication kit that told them what to expect, when to pay and how your final price will be assembled.
The endless follow-up and admin that customer questions cause means you’re also getting bogged down in reams of paperwork – costing you valuable time that you would be wiser to spend on building a professional payment process.
And time is money – especially in business. Ask yourself this, can your business and your mental wellbeing afford the time, effort and frustration that these bad habits result in?
How do payment terms help?
Payment terms tell your customers a story:
- When to pay you - this can be a deposit then a materials invoice then on installation then on completion
- How to pay you - you can ask for direct bank credits, offer credit card payments, use
- Options and other critical information around getting you the money that is going to keep your business ticking.
When done right – payment terms that match your pricing, and are communicated effectively to your customers – you will find that you:
- Perfect your quotes
- Put your most professional foot forward with bigger customers
- Get more quotes approved - and so win more work
- Get paid for every invoice - on time
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Is it time to get your payment process perfected? Do you want help taking control of your cash flow with simplified quotes, smarter payment terms & solid terms of trade?
You probably love what you do. It’s likely the reason you got into business in the first place.
However, you might not like all of the processes that come part and parcel with running a business – such as setting payment terms that work for both you and your customers.
That’s why Tradie Terms was founded – we’re here to help.
Book your free, 15-minute call to get started on the path to getting paid faster, every time.
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