How to Get Paid During Tough Economic Times

Geting paid in a timely manner by your customer s can be the biggest single difference between success and failure. During tough economic times, small businesses fail by the thousands (an estimated 500,000 small business failed in each of the last several recessions). While those thousands of businesses are different from one another in many regards, the vast majority of them share one common element; they went out of business with someone owing them money. Many of those business failures might have been avoided if the owners were more proactive. By failing to collect money rightfully owed, they sealed their own fate.

It is important to understand that even in the worst of times your customers have some money. The problem isn’t that they don’t have any money; the problem is they don’t have enough money to pay everyone they owe. If the economic conditions have created an environment where your customer is unable to pay all of his creditors on time, let it be someone else he doesn’t pay. You need to make sure you become a priority for your customer. This is a bit like the childhood game of musical chairs; when the music stops you need to make sure you have one of the chairs.

The simple way to make sure you become a payment priority for your customer is to remember the old adage, “the squeaky wheel gets the grease.” Here are some tips that any business owner can use to prompt their customers to pay on time.

1. Don’t wait until the bill is past due; call your customer on the day the invoice is due. Accounts receivables are like fresh produce–they get worse with time.

2. If you are unable to speak to your customer, leave a message identifying yourself and indicating that your call is regarding an invoice that is now due.
3. Repeat steps 1 and 2 every single business day until you get the opportunity to speak directly with the person in charge of making the payment decision.
4. If/when you speak to your customer be friendly, but firm, and ask for full payment.
5. While it is important to be polite, don’t be apologetic in your words or your tone. If you sound apologetic, you weaken your bargaining position. The customer purchased your goods or services and agreed to pay in a timely manner. Don’t lose sight of a simple truth: Your business depends on this money.
6. If your customer indicates that they are unable to pay the full amount immediately, insist on a partial payment (at least 50%) right now.
7. Once your customer has agreed to pay you (whether the full amount or a partial payment), politely insist on the payment being sent overnight with you discounting the shipping cost from the invoice amount. Ask the customer to call you back that same day with the tracking number.
8. If the customer doesn’t call you back promptly with the tracking number, call them again at the end of the business day.

Some business owners put off making collection calls because they fear they may alienate their customer. If your polite (but persistent) calls to remind your customer of the promise they made when they purchased your goods or services are going to cause them to quit doing business with you–good! No business needs that type of customer. Let your competitor have them.

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