Dec
8
Chasing Customers – To Get Them To Pay
December 8, 2008 | Comments Off
No, I haven’t hired Gino* yet. But this credit crisis has everyone suffering, especially when clients do not pay. So far I haven’t had a client tell me “I will not pay you“, or “I have gone bankrupt” (those tales go on the Prosper section). However I have had two interesting situations:
- The Hideaway – You spot a customer who promised payment across an event. The customer keeps chatting to the person he was chatting with. You wait… and wait… and wait… (Not as if you will interrupt someone’s else conversation to tell him: “excuse me, you haven’t paid the invoice!” — or would you? After an hour of waiting you go back to work, hoping he got the message. He being in the same area for the next day or two, when suddenly bang!, the international wire arrives to the business account. Payment done. I think he was just too busy to send payment and had all intentions of paying. But was stressfull nonetheless. Was nice chatting with him afterwards.
- The Big Corporation And Their Accounting Practices: Suddenly they decide to “review” all invoice payments until just a few days after quarter’s end. How convenient? I am sure the balance sheet will look good with all that positive cashflow and no negative cashflows. My balance sheet doesn’t look good right now.
Having your own business is very fun. One of the least fun parts of it is contracts, invoices, and most importantly, collecting the money. No fun at all. We all want to do what we do best: in my case, program, deliver software, provide IT management advice and so on. I do not like financial paperwork – that is what accountants like to do, not me. Yet, it is one of the responsibilities you acquire when you are your own boss. And it is not fun at all. You have your own providers as well, and they need to be paid as well.
What resources do you have to make these people pay promptly? The court is always there, but that doesn’t make it very promptly. You can also try debt collection agencies, but these will take a share of the debt collected — good considering if the debt may be difficult to collect. You can go on “strike” and not take more contracts from that customer for a while until they pay, but that may cause some missed opportunities, not to mention a strained relationship. Frequent nagging and begging has been most effective so far. I tend to remind them of unpaid invoices as soon as they are due, and ask them to check with their finance departments (or I check with their finance department myself). In some situations, there has been a clerical error that gets fixed and the payment gets processed. In others, it the friendly reminder call seems to expedite things, or at a minimum to get the payment scheduled on their payment system — which goes a long way to getting the actual check. But what other low impact* methods can you use? I do not have too many on my bag of tricks but would like to hear from others. In the meantime, some article from others that might help (or entertain):
I have seen news of creative ways of getting people to pay around the world. On India, for example they some people have tried Eunuchs: ” … cure for the spectre of bad debt currently stalking the IT industry may lie in the back streets of Bombay. In this Indian city, a debt-collecting firm has taken to employing eunuchs to embarrass those slow at paying up. The six eunuchs currently employed threaten to remove their saris, bringing shame on offenders, their businesses and their families. ” — The Register. Similar news on BBC News.
If you are like me, you probably will try the more traditional methods first. You may find some help on the following articles from The Tech Republic and More Business. If all fails, here are some tips on getting yourself a debt collection agency to help.
* Gino is an imaginary character/friend. The kind you send to collect payment on a loan/debt. For the record I have never hired, nor will hire a hitman for business purposes.
* With low impact I mean something that causes the least amount of stress to the business relationship.
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