This week, I share the tricks and tips that I learnt as a Debt Collector to help you approach clients with overdue accounts to help you get paid.
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Hi, it's Gail Bennell here, and today we're talking about overdue payments and collecting on payments. Now this is a really challenging topic for a lot of people but I have a little secret in my employment history. I used to be a debt collector.
That's right. I used to call people up who hadn't paid their credit card bills and ask them when they were going to pay. Now that's sounds, you know, pretty hardcore, but in reality, as a university job, it was pretty boring. It was very process-driven and you know, I had to make dozens of calls every night to people who really didn't want to talk to me at all, and follow a very precise script.
Now I don't recommend having a very precise script in your business for this because it's a very personal thing and I think as small business owners, we can bring a personalized aspect to things, but at the same time, you need to have, you do need to have a little bit of a script so that you know what you're going to say and you can feel comfortable saying it and that you can feel comfortable adhering to your business policies.
Now, I'm going to share a few things that I learned as a debt collector that you can use to help to add to your script to have the conversation with clients who are overdue on their payments. Now the first thing is to secure, to let them know how much is overdue and find out when they will be making payment and in the debt-collecting world that is an exact date they're going to make payment. What I used to ask people was, "Okay, so you owe $250. When will you make payment?" and most people would say, "I don't know, "sometime next week?" but what we were trained to say after that was, "Exactly what day next week?" and the reason for this is it starts to build a picture in their head of them paying the money.
Now most people don't have a lot of money in between pay cycles. You know, you get paid and then you spend your money, and then you wait 'til you get paid again, so I'd often find out when people were next going to get paid, and "Do you think you'll be able to make payment "on your next payday?" Now if they're not able to make the full payment, sometimes they might have had a large amount owing, to look for a partial payment.
"Would you be able to pay part of that, half of it, say, "on your next pay period?" and that way, it breaks it down for you a little bit to make it easier for you to get back up to date on your invoices. So get the exact figure and the exact day that they're going to make payment to you. And the third thing that I would always ask is, "What method will they be paying?" Now, you might not have a lot of options in your business but you might. You could accept cash, check, payment by credit card, or a direct deposit into your bank account.
So how many ways do you allow payment, and find out which way that they will be making the payment to you, and this also helps to build a picture in their mind of them actually physically parting with the money and paying you for the valuable services that you have provided. So there's some really psychological tips in there about making this process easier and more likely for your customer to pay.
Now, I'm really curious. Have you ever had to collect on a debt from a client? What processes have you used? Are there any tips and tricks that you find work particularly well for your clients to have their arrears paid up and paid totally up?
This is such an important conversation for us to have as business owners, to make the concept of, you know, collecting the money that we're owed for services that we have provided much easier and A, prevent overdue payments from occurring in the first place, but also in the event, to make it smooth and easy and comfortable to ask for payment.
I'd love to hear what's working for you and I'd love to hear if you've maybe you let a bad debt go as well, you know? If you haven't been, had the courage to have this conversation or if it hasn't gone to plan, what happened and how did that go? Share it with us so we can all learn as a community how to collect on those overdue payments and, you know, it's a big source of stress in our lives. Looking forward to hearing from you.
As always I'd love to hear your thoughts. Leave me a comment and share your thoughts with our community.
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