Business - Bankruptcy & the Small
Business Owner
October 17th is fast approaching when the new bankruptcy laws take
place. What effect will this have on the small business owner? Probably
a more major effect than before. My husband and I both own small
businesses. In the previous years, we have always had clients that paid
on time. This is the first year that we have seen the economy really
effect people.
Small business owners have to worry about whether their customers are
going to pay. How do you know if your customers are going to pay?
Whether you are a new small business owner or been around for a couple
of years, this is still an issue that comes up. Here are a couple of
suggestions that should help with the foundation of your business:
1) Initially when you meet with a client, you state up front the
payment arrangements. This could be whether you are paid COD, upon
completion of a job or within a certain amount of time.
2) Once you have completed the first job or two, see how the client
pays.
a) Did they pay on time?
b) Did you have to send them a reminder invoice stating they were
overdue?
c) Did you have to repeatedly call three or four times? Then when you
got the check it was returned for non-sufficient funds?
d) Did the client make good on the non-sufficient funds check?
This could possibly happen to you. The idea is to get clients that
pay on time and even ahead. If you have a client you have to remind
every now and then, that is acceptable as long as they pay. However, if
you have a client that pays you late and the check is not good, you want
to be wary.
This last type of client is not a client you want to keep or get more
of. Why? In our situation, the client came to us a second time with a
crucial job and really needed help. The first check they gave us they
made good on. We completed a job for them and we were assured we would
be paid. Then when it was time to get paid, the client’s phone number
had been disconnected. We did some research and later found out that
this particular client was being sued by the building management where
they had their office. In the end we found out that they had filed
bankruptcy.
Looking back at the situation, we knew the first time when we had
problems getting paid that we should not continue to work with them.
However, the second time we were trying to be nice and help them out of
a situation. Now, we are out of the money for doing that client’s job.
As a small business owner, you cannot afford to have many or any
clients like this last client talked about, they will send your business
into bankruptcy. Take the time to know and understand your clients. If
you have to ask for references from other vendors they have used, by all
means do that. Another alternative for a new client is to have them pay
COD until they have established a history of paying their bills. You
will not have to do this with every new client. However, if you believe
there is going to be a problem based on conversations you have with the
client, you might want to institute such a policy.
Your small business might well be your livelihood and you cannot
afford not to be paid. It is important to establish your policy up front
in terms of payment. Do not let this be something you think is
understood without verbalizing it. If one company ends up having too
many clients filing bankruptcy on them and not paying what is owed, that
company could potentially end up in bankruptcy as well.
Dr. Taffy Wilkins Wagner is the author of Debt Dilemma.
Debt Dilemma is her own personal story of how she got
into debt, was getting food from the food banks and got
out of debt without filing bankruptcy. On October 18th,
she will hold a massive marketing campaign to sell her
book on Amazon.com. For further details please visit her
website at
http://www.journeytowholeness.net. Article Source:
http://EzineArticles.com/?expert=Taffy_Wagner |
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