Sometimes it is really hard to tell if debtors truly can’t afford to pay, or if they simply won’t pay – persuade them to pay regardless!
Persuade: to convince by appealing to reason – this has nothing to do with misleading anyone, nor strong-arming them – Persuasion is about influencing and altering the way customers and clients look at you and your business.
Nor is persuasion only about one “heavy” conversation, strongly positioning yourself in all 5 areas will go a long way towards incrementally persuading all your debtors to pay on time.
Do you have trouble Persuading Debtors to Pay Promptly?
5 tips for persuading debtors to pay sooner
People respond to leadership and expertise.
An authority typically has business knocking at their door instead of the other way around. If you are recognised as a leader in your field you can usually charge higher prices which people will happily pay. Always work towards being a forerunner in your area, and even if you are just starting out, adopt a “no-nonsense” approach with every customer right from the beginning. Don’t shy away from giving Terms to every customer you issue invoices to. Even print a copy of your Terms on the back of every Invoice. Also make sure in the beginning of the sale you include a “quick chat” outlining your expectations about on-time payment – a short matter-of-fact discourse covering:
- When and how you will issue invoices – and confirm you will send the invoice to the right person who can pay the bill
- When and how you expect to get paid – highlighting your policies re discounts for early and penalties for late payment this usually prevents you getting the run-around later.
People are guided by the crowd.
We look to the behaviour of other people and, like it or not, we are guided by the crowd.
Include in your terms and conditions discount for early payments rather than a fine for late payment – then publicise it… “80% of our customers take advantage of our on-time payment discount – this keeps our debt collections and bad debt costs low which lowers overall costs and keeps our prices down for everyone.” For more information on on-time payment discounts see Smarter Pricing )
This approach has worked to reduce the amount of taxes owed by UK citizens by more than a surprising 25% since 2009.