How to rate a client according to their payment history

Nobody likes it when clients owe them money, especially when you have already delivered the products or services. In business cash-flow is everything. Don’t let any customer give you sleepless nights about money that they owe you.

This is a simple way to determine how the payment terms of your clients should be calculated and some simple suggestions on how to avoid future issues with payment.

Review each client payment history and rate them from 1-10 where 1 is excellent and 10 very very bad.

  1. Client prepays. Get to work and deliver the services or products
  2. Client pays you as soon as you deliver. Continue doing business
  3. Client pays within the next couple of days. Continue doing business
  4. Client pays within a week. Continue doing business
  5. Client pays within two weeks. Continue doing business
  6. Client pays within 30 days. Continue doing business
  7. Client pays within 60 days. Suspend all selling of products or services until money is paid.
  8. Client pays within 6 Months. Suspend all selling of products or services until money is paid. Ask for a 50 % deposit before doing business with them again.
  9. Client pays within a year. You probably spend more time on collecting your money than doing the actual work. Next time you do business with them ask for a full deposit before you even thinking of doing business with them again
  10. Client never pays you and you have to write off their money as bad debt. Never do business with them again.

A business with a healthy cash-flow is a profitable business.



Doing Business Better

Sometimes the biggest growth opportunities don’t come from new initiatives, but from taking the core processes the business is already doing and executing them more effectively.


Financial Dashboard

#whatilearnedinbusinesstoday no 5

One on the best ways to stay on top of you business finances is to have a Financial Dash board that shows your business key performance areas. You should review it al least once a day.

Key performance areas

  • All your bank balances.
  • Cash movement for the month.
  • Cash movement year to date.
  • Condensed Profit and Loss statement for the month.
  • Daily sales history.
  • Yearly sales.
  • Customers Balances outstanding.
  • Supplier Balances outstanding.
  • Inventory on hand.