In business, when can you say you have made a deal with a prospect?

When he or she hears your proposal and says okay?

When pen meets paper, and someone, or both parties sign a proposal?

When you have started performing the duties you agreed to?

In contractual terms, all of the above can constitute or signify the creation of a binding agreement. So, technically, you do have a deal.

But if youve been in business for any period of time, you realize you could be fooled, or you could be fooling yourself if you take these signs as being conclusive.

Dun & Bradstreet, the famous financial company, offers a different, and many might say, a more practical definition. It says:

The deal isnt made until the money is paid!

Well, they would say something like this, being in the credit and collections business.

Of course, what theyre pointing out, with this memorable phrase, is were all in the credit and collections business, unless we devise a way to get our money, up front.

The new client you put on the books with smiles all around, is really a debtor the moment you begin performance, until he has paid. Before you see his check youre his creditor.

I dont have to tell you there are risks and problems in this arrangement.

(1) He can stiff you, entirely. Youve performed, youre out of pocket, and if youre in the service business, your time and effort cant be repossessed.

(2) He can be a slow-pay. Yes, hes doing his part, but reluctantly; and you have to constantly hound him for your dough.

(3) If a number of your accounts are in arrears, you could get yourself into a real cash flow crunch.

(4) There are financial costs, because youre floating clients with credit, and generally not receiving interest or late fees.

(5) On the one hand, you want business, but on the other, youre constantly second guessing the wisdom of having accepted theirs.

(6) There are emotional costs to you; the uncertainty is a pain in the neck.

There is no perfect answer, because sooner or later most of us have to trust our customers to do the right thing, if only to appreciate that what goes around, comes around, and their flakiness is making it tougher for all of us to prosper.

One more thing: stereotypes dont work. You cant predict who will be a stand-up client or a flake. Big companies can string you along, seemingly forever, until they release checks, using your float as a profit-making tool. And the smallest companies can be the most diligent in meeting their obligations.

But do keep the Dun & Bradstreet definition of a deal in the back of your mind, and act, accordingly. At the first sign of lateness, note it and communicate promptly.

And stay with it, until you get back on track. Also, communicate the idea that you expect promptness, and if they dont comply, youll have to suspend your further performance, until they do.