Okay, so when we last left our hero (that’s you!) we had gone through how to set up your billing and invoicing in a way that is most likely to get you paid quickly. We started the process of creating an atmosphere of professionalism around this part of your business, which tells your clients that you are serious about getting paid. It does so in a professional yet nice way, which communicates that you are paying attention. All this will improve how quickly the money comes to you.
Now what? Now what we need to do is give you the tips on what to do when they don’t pay you, even though you have done all the right things…in other words, the dreaded word Collections!
Collecting money is a scary prospect for most people. Collections is like the twin brother of the smarmy used car salesman. Our idea is that we will have to turn into a mean stalker in order to collect what is due to us. Not so.
Here are some great tips to keep in mind throughout the whole collections process, whether you are collecting from individuals or from a company. Following these will have you being considerate and respectful of both yourself and your client.
Neutrality: You want to keep an even temperament when asking people for money. People that haven’t paid are likely to have some big emotion about this topic, and you don’t need to add to that, or even respond to it. In a company, the person that hasn’t paid may be embarrassed. Either way, you staying calm and neutral will help stabilize the situation.
Stand Back: Let them figure it out. Don’t offer suggestions. Don’t try to fix it. Don’t offer payment plans. Here is what to say:
For an individual who owes you: “When can I expect payment?”
For a company that owes you: “When is this invoice scheduled for payment?”
That’s it! Say that and the BE QUIET. Let them answer the question. Let the silence sit for a while if you have to. The main point is that you don’t want to take responsibility for this in any way. Let them have the ideas and make the commitments. Don’t get engaged in the excuses or problems. Listen to them, sure, even offer condolences, but don’t engage in them. Be sure the conversation comes back to “When can I expect payment?”
Negotiating: You can negotiate or accept some plan, but don’t volunteer it. If you volunteer the plan, they won’t follow it. It’s your plan not theirs. I can hear you out there saying “But what do I do if they say ‘I don’t have the money’, or ‘I lost my job’, or ‘I’ve been sick’, or a myriad of other things”? After all, you aren’t heartless and you aren’t a mean person. True. But you also deserve to be paid. So when they say those things, you say “Gee that’s tough.” or “I’m sorry to hear that.” And then let there be more of that quiet space. And then if you just can’t stand it any longer, you can say “What’s a plan to pay me that will work for you?”
Consistency: Predictability and follow-up are the key to getting your money. If you decide to send monthly statements, then send them every single month on the same day. If your invoice says the payment is due by the 5th, don’t wait any longer than the 8th to call and ask about it. If you say you are going to call back in 5 days, then call back in 5 days. Create a collections process or plan and stick to it, religiously.
Many times, if people aren’t paying, they are hoping you will just give up and go away. Consistency tells them you won’t do that.
Call them: If you want to actually collect the money, call and talk to a person. Don’t just send an email, or a reminder: call and talk to the person directly. You don’t have to get yourself worked up to do that. Remember, you are only going to say this:
“We haven’t received your payment of $350 (or whatever the amount is). When can we expect payment?”
Self-Management: Remember please, that whatever this problem is, you didn’t create it, and you are not responsible for fixing it or getting them out of it. Keep your own emotions in check and out of the collection process. You are bound to have some. After all, someone is not honoring an agreement they made with you, and none of us like that. But your being emotional around this will not help you get your money.
Know when to let go: A final concept here. There are times when you just need to ‘let it go’. Declare it a loss. Stop. Maybe there is a death or a catastrophe. Maybe they are just not going to pay you, ever. Maybe they are angry about something you did or didn’t do. Somewhere in there you either have to take them to court or stop. Know when that is. And once you have gotten there, take the amount off your books, clear it, put it to bed.
So there’s the plan of how to get the ‘meat in the pan’. If you get stuck, or find yourself resistant along the way, let me know. I’m sure ‘we all can untangle that thar’ knot’!