Categories
Connect with me on social media below!
We are in Social

24 March
2017
BUSINESS TIPS SMALL BUSINESS TOPICS TRADIE STORIES AND MORE
243 Views

Can you spot a Dodgy Business?

When the economy is doing well, both small to medium business owners can afford to be selective with whom they choose to do work with.

However,  when work becomes difficult to find and the bills add up. Business owners will take any work that comes over the phone or through the office door.

Is it smart to take on any work that comes along?

How do you know if a new client you are about to work with is dodgy or not?

What resources are there that you can quickly use for free?

It is important to reassure yourself before you commit to a substantial contract with a new client.

Do they have a good credit history?

Roger the plumber did not get paid

 

Don’t end up like Roger the Plumber

Roger (fake name to protect their identity) runs a small sole trader plumbing business with his wife.

A new client needed some extensive plumbing work completed on their personal home.

Roger knew that the beginning of the year to Easter is a very slow time, with the phone pretty quiet and inquiries almost non-existent.

This new client’s job would be around $55,000, half of Roger’s yearly turnover and as such, was too tempting to turn away.

Roger took the new customer on face value, without considering the implications of the job being 75% materials and 25% labor.

As the work progressed,  the new customer was friendly and always onsite.

At the completion of the work, Roger was shocked when they refused to pay.

Not only that, they appeared as if they had vacated the property and the number Roger dialed was soon disconnected.

Legal avenues proved fruitless and Roger found himself in a very difficult situation financially.

Instead of declaring bankruptcy, Roger started working as a employee with a larger firm and arranged a payment plan with his suppliers.

 

Here are some ideas you can apply to insulate your risk of not being paid. 

1. Set a maximum limit that you will grant all new clients ie $1000

2. Carry a portable paypal or eftpos system with a payment always completed upon completion. [ tweet it ]

3. Check a customer’s credit history for all contracted amounts above $1000 or more. [ tweet it ]

4. Ask new clients to provide credit references with a number of their regular suppliers. 

5. Does your new client employ a bookkeeper or accountant?  Get the details and forward the invoice directly to them as well.

Companies or sole traders who employ a bookkeeper or accountant (even on a part-time basis) will usually have financial records in order and are more likely to pay invoices on time.

 

Where can you find out credit history information both free and paid services?

 

FREE RESOURCES

ASIC’s MoneySmart web page has a list of companies you should not work with. [ Money Smart ]

ACCC’s webpage also has an extensive list of dodgy operators  [ Scam Watch ]

ATO’s free business app [ ATO] can be downloaded to check basic company information.

 

PAID RESOURCES

Veda applied intelligence can print out levels of company credit history for you, for a price [ Link ]

Dun & Bradstreet have both paid and free business credit reports [ Link ]

 

Is it worth having no money

 

Credit Checks and paid resources are too much money

You might be thinking that $90 – $400 is  a lot of money to outlay for peace of mind.

It’s only when your facing the possibility of a client not payment a bill, that the implications of still being required to pay your suppliers and juggle your cash flow actually sink in.

Is the additional time, stress and pressure on yourself and your business really worth it?

If spending $400 saves you a bad debt of $40,000, isn’t it a small amount to pay in the scheme of things?

In the end, you need to decide on a system that works for you and your business.

 

If you have enjoyed this article, why not subscribe to be kept up to date with future articles in our FREE newsletter to be started 2017-2018 financial year? Just type in your email address in the black box above on the top right hand side.

 

Amanda Hoffmann is a registered BAS Agent No.18613005, Associate of Finance, Xero Certified, Myob Essentials and Quickbooks partner.

She says she is more than just a bookkeeper with experience in real estate investing, social media, podcasting and blogging.

Amanda loves to teach smart, easy online cloud solutions and can show you how much fun bookkeeping can be. Follow her on social media and say “Hi”




Leave a Reply

Your email address will not be published. Required fields are marked *

Social Media Mavericks and Analytics on a Shoe String

Popular Posts

4 Tips for the Reluctant Small Business Owner to do their Bookkeeping
15 July 2016
BUSINESS TIPS, SMALL BUSINESS TOPICS, TRADIE STORIES AND MORE
4 Tips for the Reluctant Small Business Owner to do their Bookkeeping
Are you one of many small business owners where the "thought" of having to do your bookkeeping makes mowing the lawn or seeing your dentist more appealing? Amanda Hoffmann from My Office Books offers you four very practical solutions.
James Lindsay Grade Six School Teacher to Author
17 September 2016
BUSINESS TIPS, SMALL BUSINESS TOPICS, TRADIE STORIES AND MORE
James Lindsay Grade Six School Teacher to Author
Ever thought about writing a book, but never found the time to do it? James Lindsay has a secure job as a Year 6 school teacher, but he had the dream of writing his own book. He has self-published his first book and here is his story!
No More Lost Receipts
16 September 2016
BUSINESS TIPS, SMALL BUSINESS TOPICS, TRADIE STORIES AND MORE
No More Lost Receipts
Keeping track of receipts and expenses when operating a small business can be a challenge for the average trades person or property investor. Automation is the way of the future and we can help you now. Read more to find out how.
Busy is a State of Mind
12 August 2016
BUSINESS TIPS, SMALL BUSINESS TOPICS, TRADIE STORIES AND MORE
Busy is a State of Mind
Do you find you just don't have enough time in a single day to get everything done? You are not alone. The real question is however, s it you really don't have time, or is it just your mindset? My article explores this very question.....
Bookkeeping Issues….Do you have the Five?
01 September 2016
BUSINESS TIPS, SMALL BUSINESS TOPICS, TRADIE STORIES AND MORE
Bookkeeping Issues….Do you have the Five?
Are you one of many small businesses that have the five? 1. Finding "time" 2. Procrastination 3. Overwhelme 4. Worried about cost 5. The ATO Then this is the article for you!
BAS Agent and Bookkeeping