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The tradie’s guide to getting paid on time

As a hard-working tradie, there’s nothing worse than doing a hard job right and delivering great work to your client’s precise brief and deadline, only to then have to wait and wait and wait to be paid…or to not get paid at all.

Not only can such instances slow you down, as a tradie and a sole trader, not getting paid on time can also mean you may not have the funds available for supplies or external labour for your next job, or to pay yourself.

This is when not getting paid on time goes from being an annoying inconvenience to compromising your business, impacting your livelihood, and causing major headaches that could potentially result in you having to take legal action against your clients.

Fice tradie invoice tips for getting paid on time and in full

So, what can you do to avoid such sticky situations and instead get paid on time and with a whole lot less pain? Here are five tradie money guide tips to help get you paid on time, in full, and on your terms.

Tradie invoice tip 1: Know your customer and how they operate

If you are sub-contracting to another business, make sure that the business hasn’t got cash flow issues of its own, such as trading while insolvent. You may even want to purchase a credit report if you have specific concerns or if the business in question has a bad reputation in your industry.

You may also ask your customer about how they found your business. Did a third party refer them to you? Which other tradespeople have they spoken with or engaged with?

Forewarned is forearmed, so it could be worth your while to ask this potential customer all of your questions before you officially engage them in your business. Or did they just walk in off the street because no one else would do business with them?

If you still have concerns, ask them to refer you to other organisations that they have worked with so you can verify the quality of their work and the way they conduct business.

Tradie invoice tip 2: Formalise your credit terms and get sign-off

If you feel a little uneasy about doing business with a customer that you don’t know well, it may be worth your while to use a formal credit application that your customer signs. Don’t frame it in terms of you not trusting their word – even if that’s the case. Instead, explain that this is a standard operating process that you have put in place for all new clients.

By formalising your credit terms and getting sign-off from the client, you will demonstrate the level of professionalism you hold yourself to, and that you expect your clients to act with the same level of professionalism. All work you perform should be invoiced as soon as possible, preferably on the day, and then signed for by the customer before you leave the site to avoid disputes.

Tradie invoice tip 3: Request a deposit

It’s not uncommon to ask for an upfront payment or progress payments for your tradie services rendered. However, expect some pushback from your clients, in which case you can explain why you have implemented deposits for first-time clients. Negotiate on the size of the deposit if that’s what it takes to secure their business

Tradie invoice tip 4: Introduce late fees

Late fees hurt. They are frowned upon by clients and would-be clients because they instantly suggest a lack of trust on your part, which can put clients on edge. But in some cases it may make more sense for you to penalise customers if they don’t fulfil their end of the bargain and pay you within the timeframe they agreed to.

The most important thing with late fees is to be 110 per cent crystal clear on the terms. Spell it out in no uncertain terms in your contracts; don’t just shove your late fee terms and conditions in the fine print of your agreements, where they may get overlooked. When you engage a new client, explain your payment terms and how you manage late payments through late fees.

You may set your late fees in incremental amounts depending on how overdue the outstanding payment is. Likewise, you may also build in an on-time payment discount of, say, 10 per cent, to incentivise clients to pay on time.

Tradie invoice tip 5: Maintain good communication

One of the most important things in business is clear communication, especially when discussing payment terms with clients. Constant and consistent communication can be key to avoiding late payments from clients. So don’t hesitate to send friendly reminders to clients when their invoices are due. Because sometimes even the best of clients may simply have forgotten to pay your invoice. A simple nudge may be all it takes to do the trick.

As a busy tradie, you’ve got a lot to deal, from running your own business to ensuring clients meet your payment terms. But one thing you won’t have to worry about when you choose BizCover is your tradie insurance*. Our tradie insurance is business insurance carefully designed to reduce the specific risks facing tradies. Get a quote for your tradie insurance today or call us on 1300 920 864 for a chat.

*This information is general only and does not consider your objectives, financial situation or needs. It should not be relied upon as advice. As with any insurance, cover will be subject to the terms, conditions and exclusions contained in the policy wording. © 2022 BizCover Pty Limited, all rights reserved. ABN 68 127 707 975; AFSL 501769

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