Another point to consider, is the cost of the debit order on the client. Lets say for instance your service costs R30 a month, the debit order cost ts the client R20, it means the client actually pays R50 for your service.
Another point to consider, is the cost of the debit order on the client. Lets say for instance your service costs R30 a month, the debit order cost ts the client R20, it means the client actually pays R50 for your service.
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Glad to hear it! Just make sure, then, that it's feasible.
Keep us updated with you progress as you go along.
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There's nothing wrong with setting up your business to only take on clients who will sign debit orders. In fact, if defaulting clients is known as a significant issue in the particular sector, and the structure is around regular monthly payments, there's a strong case for going that route.
Just know that there's no free lunch. You will have customers who will go elsewhere as a result, and will love telling you how you're losing business as a result of your inflexibility.
Whether you're actually losing really depends on the typical bad debt profile you can expect from those clients you're flushing.
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BusFact (07-Feb-12)
Hey everyone. Just thought I would update you all on my progress. I have hit a pretty large snag. And to be honest right now it doesn't look like the idea is feasible... Not because of the actual idea but because of legal issues. I know this isn't a law firm but if anybody can maybe give me advice, I would really appreciate it.
Just to point out - It's hard to give advice on an unstated problem.
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Mark My Words - Arbitrary thoughts on ordinary things"The way to gain a good reputation, is to endeavor to be what you desire to appear." - Socrates
Trench Life - A blog for young professionals, BY young professionals
Bafokke Shirts - South Africa's No. 1 Fan Shirt!
We thought of instituting a debit order system for our clients +_ 1000 clients - we used a service provider that had all the systems set up already and the monthly service fee was R99 and we could submit any number of transactions per month and only paid per transaction. The headache was not ours but someone else's. The system never took off for the simple reason 95% of our clients had us registered as a beneficiary on their bank account and we work 100% on word of mouth referrals and the referees told the new entrants how we worked. So our company already established culture worked against us. You should have no problem with trust if you do your marketing in the right way. SA still dont trust the internet 100% but they are getting there, but D/O are fully entrenched in the SA system. The marketing effort needs to be geared to owning a part of the consumers mind, if you dont achieve that you are sunk. Differentiation is not about price, anyone can get a marker and mark a price down, it's about much more than that. Then there's uniqueness, everyone throws the word around but what is it actually, find out what it is and use it!. Competitive advantage - its much more than that too, its about having durability is a competitive world. Can you withstand the barriers to entry, which in what you are trying to enter are substantial. Do you have a support system and a mentor? You will need one. Desperately. Do you have a scaleable Business Model to accomodate growth Quickly. Business growth esp unforseen can cripple a business. Keep innovating to keep ahead of the pack. Also keep in mind that choice creates indecision. - Take magazines for eg - the explosion of so much choice has led to indecision of the buyer and a decline in overall sales in the sector.
The problem being?
Credit Control, A new business usually takes on any risk, asking for a 3 months up front fee usually sorts this problem out, if they dont have the cash flow now, the the chances of bounces are high. You can also get a bank code, with reflects a high bounce rate. People with bad bounce rates have certain character traits in common. 10% bad debts is the norm accross all sectors but you would want to keep this to a minimum. No business operates without bad debts over the long term, that the reality of it
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