Home – New Forums Money matters Ensuring payment is made for large orders

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    Matt Jacobs
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    Hi,
    As my business grows, I find I am facing a problem and I am not comfortable with the business risk it involves.

    I can sell a product that is sometimes worth hundreds of thousands of dollars, but at a very small margin (e.g. $100,000 and make around $1,000 profit). They are easy enough sales, but the risk if one of my customers does not pay is worrying me. Because of competition I cannot make my profit margin higher to cover some of this risk.

    Apart from a signed contract, a deposit, regular payment schedule, personal guarantee etc (which is already what I do), is there a better option? Perhaps some kind of bank guarantee or something?

    With the businesses I am dealing with (large construction companies) if they go bust a contract isn’t really worth anything. Even a personal guarantee isn’t worth much.

    I was just wondering if anybody else out there has had this kind of problem. What do the really big companies do? They must have this same problem.

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