How To Get Your Debtors to Pay…

Getting money from sales into your business is of course critical – I’ve covered in other blog posts steps to take to make sure you get cash in quick when you make a sale – but this time I’m going to focus on a series of collection tips for those customers that have not paid by the due date. 

1. Whenever possible, do your debt collecting by phone or send a person.  I prefer sending a person for anyone not responding by phone.   Only write a letter if neither of the other two options are available to you. 95% of the time writing letters is a waste of your time and money – it is only to be used when in person or over the phone cannot be done.

2, When your contact customers, don’t hand them an excuse (”Did you receive your invoice?”).  It’s better to ask them, “When was payment made?” If they tell you it hasn’t been made, ask them if they intend to pay it today. If they say “no,” ask them when they have scheduled it to be paid.  Get a commitment from them.

3. If they haven’t scheduled it, ask them if they intend to pay the bill. If they say “no,” ask them why. Once you have the reason, hang up or walk away. If you continue the call or visit at this point, you may be crossing over into harassment. You can then wait a day or two and call back to confirm the customer’s position, but don’t call or visit more than twice if they say they don’t intend to pay the bill.  At this point, it’s time to turn to a collection agency or Court.

4. If you ask your customers if they intend to pay their bill, and they say “yes,” you should continue the discussion. Ask them why they haven’t paid it. They’ll give you either a reason or an excuse. In either case, get a firm commitment from them for when they can pay you.

5. If they give you an excuse (”I can’t pay you until my customer pays me”), don’t respond emotionally.  Use logic instead.  Ask them for a definite commitment and a time frame in which you can expect to receive payment.  Make sure that you agree on all the details, including when, how, and where the money will be paid (”I’ll deliver a cheque to your place of business on Monday”).

6. If they give you a reason (”The goods you delivered to me were damaged”), try to remedy the condition, if it’s within your control.  For example, if you agree that the goods were damaged, see that the customer gets undamaged goods.

7. If they refuse to give you a commitment (”I’ll put you on the list to get paid”), you’ll have to review your options.  In some cases, you can force a commitment by taking away their credit on future purchases.  In other cases, your only two options are to go to Court or turn it over to a collection agency.  

8. If you deal with large companies, you need to get in tune with how they pay their bills. Find out from them when the last day is for getting an invoice approved to get into this week’s (or bi-weeks or months, depending upon how they pay their bills) bank run. When you need to collect from them, call a couple of days before that date to make sure that they have all the documentation from you that they need.

Regards,

Peter