The question arises frequently: "What is the single most important aspect of running a business?" Popular answers include customer service, fulfillment and good sales skills. I’m in the camp that thinks it's getting paid.
This might seem a bit obvious but there are many ways in which we can end up with the short end of the stick, so to speak. But a business cannot operate without income and smaller businesses like custom woodworking shops are particularly vulnerable if a payment falls through the cracks. Even if you end up with the work still in your hands, the outlay to complete the project has to be covered in some way.
Over the years, I worked out a system of staged payments on my jobs that allowed me to stay one step ahead: an initial deposit of half the project cost and at least one substantial progress payment at approximately 75 percent completion. That only leaves 25 percent or so to collect at the end. At that point, payment on delivery as agreed in my customer signed proposal is in the customer's best interest since they already have a good sized investment in the project.
Of course an arrangement like this must be managed carefully as it can lead to front loading and leave you short of cash at the end of the job. But being heavily invested in a project and having to collect a large sum at the end poses a much greater risk.
D.D.
