Tradies are the heart and soul of Australia. Up at the crack of dawn while the rest of the country is still asleep, a tradie will work his or her backsides off – painting, decorating, building, moving, digging, lifting. It is back-breaking work and while they are often experts at their craft, admin work, invoicing and asking to be paid are skills that many of them struggle with.
Tradies are some of the most genuine, trusting and honest folk you will ever meet and sadly, it is these same qualities that make them easy targets for unscrupulous builders and clients who don’t want to pay. Often, they are competing with other tradies for the same job and same work, so they tread carefully, not wanting to rock the boat and jeopardize future work.
So, what is the answer? How can tradies protect themselves from a bad debt and ensure they get their money?
Here are our top six ways for tradies to get paid:
1. Research new customers
Prevention is always better than cure and running a new customer’s name and business name through google is a great way to find out if they are shonky and unlikely to pay. Using the ABR website also will provide ABN details, show whether they are registered for GST (thus turning over more than $75,000 per annum) and in the case of companies, if they are insolvent.
2. Ask for 50 per cent deposit upon acceptance of quote
While this does take some guts, there is nobody more important to look after than number one and tradies need to protect themselves at all costs. Provided their quote is competitively priced and they are confident of doing an exceptional job, then paying an up-front payment should not be a problem for new customers. The risk is then shared, instead of owned and both parties are invested in seeing the job completed. If the customer refuses to pay 50 per cent, then insist on 25 per cent. Anything is always better than nothing.
3. Get a credit application signed including a credit limit
Asking your customer to complete a credit application is a pro-active step that every tradie should follow. Regardless of the size and scope of the job, having a documented agreement shows diligence, professionalism and thoroughness and these are qualities that large companies are always looking for in their suppliers. Resistance on director’s guarantees is to be expected, however it is vital not to waiver, except if it is a large, well known company.
4. Do not incur new debt when old debt is still outstanding
So many times, we see tens of thousands of dollars’ worth of new work completed, when older work still has not been paid for. Stopping work and refusing to do anymore until their account is brought up to date is one of the most important steps a tradie can do and is great leverage to motivate a customer to pay. Remember, an invoice is not worth the paper it is written on unless it is paid, so while it is exciting to be given more work, until you see your money you are working for free.
5. Chase up outstanding invoices the moment they fall due
Set a precedent – be thorough, diligent and determined, and ensure that your customers abide by your terms, not the other way around. Invoice due on the first? Ring and email them on the third. Customer not answering their mobile? Send them a text insisting they make a payment that day. Been told you will need to wait until the end of the month? Tell them that is fine, provided they make a payment today and aim for at least 50 per cent.
6. Download the CollectMORE smartphone App
Tradies were at the forefront of our mind when we created the app, that is free to download and use. To find the app search “CollectMORE” in the Google Play or Apple App Store.
Paul Metcalf, Managing Director, www.collectmore.com.au
