For many people, including collectors, asking for money is difficult. We’ve trained thousands of individuals over the past thirty years and the majority have expressed to us they are often uncomfortable asking for money. We have found this interesting because most teenagers and young adults have no concerns asking their parents for money or a loan. What occurred between the teen years and adulthood that makes us uncomfortable asking for money? What is it about asking strangers to pay for something they have purchased / received and promised to pay for?

Whether one is comfortable in asking for money or not, the majority of collectors have difficulty getting paid because they never ask for the money. Most collectors when contacting the customer / client will avoid asking for the money but rather ask for a promise to pay. They will ask “when can we expect payment” or “when do you plan to send the payment”. We have to remember that when we contact the customer / client for payment, after the due date, the customer / client has already made a promise to pay that they failed to keep. The first promise to pay was given by the customer / client at the time they requested our goods or services.

We should never ask for a “payment” because in more cases than not we will not receive the total amount owed but rather a “payment”. If we want the full amount of what is owed our firm, whether it is an invoice or note payment, we have to ask for the full amount. If they owe us $5000.00 of which $1,000.00 is past due then we have to ask for $5000.00. If we only ask for the $1,000.00 then we have established the point at which negotiation begins. We should always begin our negotiation with the total amount owed and never be vague when asking for money.

Now that we know what to ask for how do we do it professionally as well as effectively? First, never accuse the customer / client of not paying the invoice on time. This can be accomplished by being direct and friendly. “Hi, this is David Balovich with the 3JM Company and I’m calling about invoice number 476. Can you please tell me when it was paid”? One of the common complaints that we hear from collectors as to why they do not like calling for money is “when I call the customer / client about the past due invoice they become hostile or defensive”. This is probably true and the reason for their response is because the majority of people respond, in kind, to what they hear. When we call a customer / client and inform them we are calling about a “past due bill” what they hear is our accusation that they do not pay their bills on time and when we say “past due” in an unfriendly manner then they hear that they are not “responsible people”. Our goal is to motivate them to respond to us in a favorable manner and so rather then our telling them they are “irresponsible” or have “failed to do what they promised” we want them to tell us that they have been irresponsible and will pay us. When we ask them “when was the payment made” and they have not done so then it is they, not us, who is saying “we have not paid the bill”. Once they have told us they have not paid the invoice then we can ask for the money. “Will you send us the $5000.00 today?

We realize this may sound too easy or simplistic, but notice the questions we have asked only require a “yes” or “no” response. Granted, the customer / client will have other responses but we are not asking for them and it makes it more difficult to provide those responses if they are not asked for. We have begun the conversation in a manner that definitely will improve our odds of being successful without having to make follow up collection calls. Also notice, that we did not apologize for calling for payment and we did not begin the conversation by discussing nonsensical topics such as the weather or weekend sports scores or other topics un-related to the purpose of our call.

It is also important that we contact the individual who not only has the authority to pay our invoice but is also the person who we should legally be discussing the payment with. Thus, it is especially important that we know the legal composition of the business that owes us money. If we are dealing with a proprietorship, one owner, our contact is limited to the owner or accounts payable or whomever the owner informs us to contact for payment. Remember the debts of the proprietorship are also the debts of the owner. When dealing with a partnership, the debts of the partnership are also the debts of the general partner(s). The same applies to a general partnership as a proprietorship, the general partner(s), accounts payable or whomever the general partner(s) inform us to contact. In the case of a corporation we can discuss the debt with any individual employed by the corporation who has the need to know and / or has influence to make payment. In addition to accounts payable it may include sales, purchasing, or the end-user if the product or service is for use and not re-sale. The information about the type of business and who to contact is often contained in the credit application. The credit application should be reviewed prior to the first collection call to determine the legal composition of the business and contact names and phone numbers, email addresses and payment location.

In some instances our customer / clients may be large corporations who inform us that their policy is to pay everyone in a specific number of days, 60 to 90, even though our terms are 30 days.

Ideally, we have identified these “sacred cows” prior to billing and there payment terms have been “approved” by management. However, sometimes these firms will exceed their own payment policies and it becomes necessary for them to be contacted for payment. In these circumstances it is wise to have names and contact information who can assist us in securing payment so as not to disrupt the relationship. These contacts include personnel within our own organization such as sales and management. We also should have names of people in the customer / client organization we can go to for assistance in tracking down the reasons for non-payment or writing a manual check. We have found the customer / clients credit department to be helpful in finding the reason for the delay in payment.

Another option is that if we know of another vendor who reports being paid promptly to ask them what they do to get the customer / client to pay promptly. The purpose of obtaining credit information from another creditor is more than just a payment rating. Inquiring as to what motivates the customer / client to pay promptly is within the parameters of a good credit investigation and should be utilized by the collection staff.

In any economy but particularly today’s business environment, both individuals and companies who owe money have a strong incentive to hold on to their cash for as long as possible. This has placed additional stress on the collection professional to obtain payment within terms and at the same time keep the customer / client satisfied and continuing to purchase. Creditors that get paid more quickly are historically the ones whose product or service is most essential to the customer / client.

Effective collections involve utilizing a combination of technical and psychological skills. Everyone involved in the collection of debt, whether they are seasoned collectors or new to the profession, can accelerate their results by consistently incorporating these skills in their collection efforts. The following techniques are suggestions for enhancing our collection efforts.

Upon receipt of the first payment, make a note of the bank the check is drawn on, the account number (including routing numbers) and the check signers name.

Offer a discount to past due customers to pay their bill, in full, today. Consider that a ten percent (10%) discount for payment today may produce less of a loss then getting paid ninety (90) days from now. And remember the odds of getting paid in full decline rapidly as the debt ages.

Charge a monthly interest or flat late payment fee and enforce it. Most companies have this in their terms but they never enforce it. Credit card companies do not forgive late fees, why should we?

If we agree to a payment plan convert it to a note payable. The note removes any further dispute concerning the original invoice and cleans up the account receivable.

If the customer / client does not have the money immediately available have them send post dated checks today for the amount owed. Post dated checks are legal and it is much better to have a written promise to pay, in hand, than a verbal promise to pay.

Consider alternative forms of payment such as credit or debit card. The small fee associated with credit card payment is small compared to waiting for, or not receiving, payment.

Do not rely on sending written or follow up collection notices. Telephone calls are more effective. Call the customer / client no later than two days after the due date to confirm payment was made, include check number, date, amount, and the address it was sent to. Most collectors wait too long to contact the customer / client about the overdue invoice.

Contact the customer / client when they pay their bills. Invoice due dates and when the customer / client pay their bills are not synonymous.   Most customers / clients do not pay their bills on the due date but rather in accordance with their payment policy.

Follow-up frequently, once or twice a week is not harassment. Maintain collection notes and follow-up promptly.

When calling always ask for the total amount owed regardless of due date. The due date is the maximum amount of time the creditor has to pay. The balance is due once they have received goods and/or services. If we have to negotiate payment, we want to begin from the strongest possible position..

Identify and always contact first the best person to achieve the results we are seeking.

Should the debtor become upset and disconnects the conversation do not immediately call back. Wait until the next day and try again. Trying to get paid when the customer / client is emotional is a waste of resources and more often than not will only lead to further anger or frustration and not result in a positive outcome.

If the customer / client refuses to negotiate and make commitment be prepared to seek outside assistance. Chances are very good that under these circumstance payment will not be forthcoming anytime soon and involving a third party communicates to the debtor that we are serious about collecting our money promptly.

When the customer / client is a “sacred cow” in the above circumstance involve senior management immediately.

One of the benefits of paying promptly is the customer / client will have one less collection call to interrupt their day. This should always be communicated to whomever we are negotiating payment with.

I wish you well.

David Balovich is an author, credit consultant, educator, and public speaker.
He can be reached at 3jmcompany@gmail.com or through the Creditworthy website.