Surefire Ways to Collect What You’re Owed
In a previous Blog I explained how to avoid a debtor problem…which is great moving forward, bit how do you deal with the money owed to you right now…
Here’s some great ways and techniques to get the cash flowing to your business more freely.
I have some new ways of writing to your customers that I know will get you results…
And as a business owner…we ONLY get paid for our RESULTS!
Let’s explore this critical area even further. It really is vital to collect as much money as quickly as possible and keep your debtors to a minimum. These tools will help you do that.
Use letters that really reach a person instead of letters that badger them!
Here are some letters to get what you’re owed back into your pocket.
As you’re probably aware, most debtor letters are negative and threatening. (Conversely, most businesses NEVER send a thank you note for receiving payment.)
These sorts of letters alienate the customer. People don’t like being threatened even if they know they’re in the wrong. It makes them resentful and uncomfortable. This also makes them less likely to pay quickly and certainly less likely to purchase from you again.
Better to reach a debtor on a person-to-person basis.
You see, almost everyone has owed money to someone else at some point. Even you perhaps?! Maybe you forgot a small account. Maybe you were having difficulty paying a larger one at some point. Maybe you were just too busy to get to it. Whatever it was, usually though, you would never have purposely just NOT paid someone. (Very occasionally, someone might do so, but why punish and alienate the majority for the sake of a troublesome minority?)
Bearing that in mind, let’s take a quick look at a couple of typical debtor letters. The first, in particular, seems to be the norm for those businesses that bother to write requesting the dollars owed.
It has come to our attention that your account is outstanding.
The overdue amount is : $56.54
Please correct this situation immediately by calling us with your credit card details, sending a cheque today or visiting the premises.
If your arrears fail to be received within the next 14 days, you will leave us no choice but to seek legal action. Of which you will be liable for this amount and all court costs.
Legal action will be taken if the amount of $56.54 is not paid.
In the meantime, we appreciate your business and if you have already paid this account, please disregard this letter.
Or another, not quite as harsh but a bad letter just the same:
We refer to your outstanding account with our firm. As you are no doubt aware, the amount charged to you is our selling price. While we do not provide any goods or materials, we do have a very large infrastructure that must be financed. Not the least of these is our commitment not only to keep up-to-date with legislative changes, but also to keep touch with the current best business practices.
in order that we can provide you with better services, our cash flow is of prime importance. We would therefore ask you to make payment as soon as possible.
if you have some complaint with our services or are experiencing cash flow problems, please call to discuss the matter. I’m sure any problems could be solved to our mutual advantage. If you are having cash flow problems, perhaps we can help you to plan your business objectives and review your business practices. This could well solve both our problems.
As you can see, both letters are harsh. Both fail to consider the customer’s point of view. The first is threatening and overbearing, only to say ‘but thanks anyway’ at the end! The second talks about the business and not about the client. It’s a complaining, almost indignant style of writing. As is the case with these types of letters, it’s not unusual for debtor letters to come across as negative.
Perhaps yours are written in a similar style? If so, consider this:
People pay people they like! And the purpose of any debtor letter is to retrieve your money in full.
As such, it should not make you feel good and the client feel awful. It should build empathy in your direction!
instead, try a letter like this one:
July 13th, 2018
PO Box 123
Spring Hill, Thursday, 2.50 p.m
Good morning, Susan,
You know, bank managers and accountants can be such pains in the butt!
They do, though, have one very important function—they remind me occasionally that I’m running them out of business by competing with them.
“Look here Wayne,” they say, “we’re the ones who lend money, NOT you. And you don’t charge any interest either.”
You see, Susan, I’ve effectively loaned you $1,200. The $1,200 you’ve owed us since May 5.
Now, you might feel a little uncomfortable about that, so acting on this letter may well help you feel a little better.
All you have to do is call us with your credit card details or drop your check for $1,200 in the mail. I’d really appreciate it if you could do that right now or please call me so that we can find a solution to the problem.
Thanks in advance for taking some action, Susan, and for doing it quickly. That way we can both keep our paperwork piles down.
Keep at it…
PS And I guess we can make at least one bank manager happy, too!
Or perhaps a letter like the one below:
July 10th , 2018
PO Box 123
Spring Hill, Tuesday, 2:50 p.m.
Good morning, Michael,
You know, I’ve tried 47 different ways of starting this letter to you. And then, it finally hit me.
All I had to do was say H E L P !
All I had to do was explain that I had a problem and needed your help. I figured you’d want to know exactly how you could help.
You see, someone in your organisation currently has an account they’re “sitting on” for $2,900. Sure, it’s not taking up any space, but it can be annoying to have paperwork piling up.
So, you can reduce that pile and help 3 people at the same time.
First, you’ll help me. Second, my bank manager will change his scowl into a smile. And most importantly, you’ll help yourself by getting rid of something that might just sit there like a thorn in your side.
Thank you in advance, Michael, for taking action on it now. I really do appreciate your help. Keep at it and keep on enjoying…
PS If for some reason you can’t act NOW, I understand. But please do call me so that we can find a good solution.
The idea behind these letters is that they’re ‘friendly.’ And people don’t like owing their friends money. And most don’t like to think they’re making someone feel badly.
Also, you’ll agree these letters are different. They certainly stand out from the rest of the debtor letters your customer may have ever received.
Because of that, you can be sure they’ll be read.
Your customer will understand your position better while relating to your message, instead of being offended by it. Many will get the ‘guilts’ and feel compelled to do something!
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