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Seller Beware
© 2000,
by Janet Attard
- Much has been written
to help people avoid scams when they are looking for business
opportunities. But opportunity seekers aren't the only ones who
are getting swindled online and on the Internet. Sellers of merchandise
and services are getting burned, too.
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- Case in point:
a New England business owner recently wrote to me to ask how
they could collect on out of state debts. They had sold more
than $1500 in advertising specialties to a business in another
part of the country. The business owner trusted the person to
whom the goods were sold, because the customer "acted as
a friend." Then the business owner explained, the customer,
"promised to pay and said the 'check was in the mail.' But,
it never showed up. It is difficult to track her down... she
continually lies and avoids me...her e-mail responses used to
quite flowery and apologetic, now she doesn't respond at all."
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- Collecting after
the fact is hard to do. It is particularly difficult and costly
to collect money owed to you when the individual or business
that owes you money is located in a distant part of your state
or in another state or country. While nothing will ensure you
will never have collection problems, you can minimize collection
problems by implementing some or all of the suggestions below.
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- 1) Have your
attorney help you design a credit application that will establish
a legally binding contract, and then have all customers to whom
you will be selling on credit complete and sign the credit application.
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- 2) Get as much
information from the customer in advance as possible. Get their
full name and address, business address, and business telephone
numbers, fax numbers, email addresses (get multiple email addresses
if they have them), drivers' license number, former address,
maiden name, and if the order is big, the name of their bank
and bank account number. In short - all the same information
you're asked to fill out when you apply for credit.
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- 3) Verify the
address and phone numbers you are given. Call back the day after
an order is placed to make sure the person who gave you the order
is at the phone number given. If it's a business, call the business
headquarters and ask if the individual works there. If you gather
information via email, immediately print the information and
store in a paper file so you can find it if you lose your email
on disk or if your hard disk crashes.
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- 4) Ask for three
credit references and check them. Discuss credit terms at the
time the sale is made. If you don't get all the details straightened
out up front you may wind up in a situation where you are expecting
payment on delivery or within, say 10 days, and the client expects
to have 30 days after receipt of your bill to pay. Under those
circumstances, a collection call from you 2 weeks after delivery
is likely to make the client annoyed, and kill any chance you
might have for additional sales to the company.
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- 5) Put everything
in writing. It is the only way you have of proving what terms
your and your customer agreed on.
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- 6) If you will
be billing a company, find out who should get the invoice.
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- 7) Get part
of your money up front. Common arrangements are 50% down and
the balance on delivery of the product (or completion of the
service) or progress payments (i.e., 1/3 down, 1/3 halfway through,
and 1/3 either on delivery or within 10 days of delivery.) If
you will be buying services for your client, or subcontracting
some of the work, try to get enough money before delivery to
cover all of your expenses and some profit. An artist I know
nearly lost his house because he was acting as an agency and
was paying all the typesetting, printing and space costs for
a small corporation that
had a big cash flow problem.
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- 8) Consider
COD or full payment in advance from out-of-state customers.
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- 9) Have the
customer charge the purchase, instead of billing them for it.
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- 10) Send out
invoices promptly. And, send out reminder notices promptly if
payment doesn't show up when expected.
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Janet Attard is the author of Business
Know-How: An Operational Guide for Home-based and Small Businesses
with Limited Budgets. She is the founder of the Business Know-How
Forum(sm) on America Online and the Business Know-How(sm)
web site at http://www.businessknowhow.com. She can be reached
at [email protected]. Crescent, Virginia
Beach, VA 23456.
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