Ringing a customer to find out why an invoice hasn’t been paid can be difficult.
Fortunately The Prompt Payment Directory has been discussing just this with David Walker from Cashflow Rescue. Here’s what David had to say.
PPD: At what stage during the credit control process do you advise picking up the phone?
DW: I’m a big fan of communication to resolve disputes so I would say pick up the phone at the earliest opportunity. However, you have to be realistic, especially in a busy credit control department so you may not have the time to speak personally to each client as soon as their invoice is overdue. Therefore, I would probably send a first reminder letter and then if this didn’t lead to payment, speak to them to find out why payment hasn’t been made.
Alternatively, if you have a good relationship with your clients and you have regular, ongoing work, you can mention it in one of your calls. It doesn’t have to be a specific call to deal with the late payment.
PPD: What are the most important preparations to be made in advance of this kind of call?
DW: You need to have all the information to hand to be able to answer any questions from your client. Clearly, this is going to be different for different businesses, but you should always know when the invoice was sent out, when it became due, and how much is outstanding. Again, depending on the size and nature of your business you might be aware of, for example, how and when the service was provided, if there were any problems along the way, how they were resolved etc. Basically, you need to be able to anticipate what your client may say to delay the payment and have a response ready. Having to say “I’ll find out and get back to you” will only delay payment further.
PPD: In your experience what tone of voice do you find is most effective in delivering results?
DW: I usually start off friendly and try to build some rapport. A bit of small talk is fine, but we’re all busy so you have to keep this business-like. Always be assertive, but not aggressive – there’s a big difference!
PPD: What is the best way to manage the conversation if the person you are calling adopts a combative stance?
DW: First of all, don’t fight back! Understand why your client is feeling like this. They’re probably stressed and on the defensive, fighting 101 other fires in their business. You need to keep your emotions out of this and remember what outcome you want – i.e., your invoice to be paid. Listen to them and then respond with logic and reasoning, rather than emotion.
PPD: How should you respond if the person you are calling requests that the conversation be postponed for an hour or a day on account of “an urgent task or meeting” that they must first attend to?
DW: If you have to postpone a meeting, try to get a commitment and a time and date in the diary for the re-scheduled meeting. Then confirm this in an email.
PPD: What should you absolutely not say on a call such as this?
DW: I never ask “if this is a good time”. It’s a good time for you and if it isn’t a good time for your client, they will no doubt tell you. If they know you’re calling to ask for money and you ask “is this a good time” it’s too easy for them to say “no” and that they’re busy.
The other thing to remember is never to be embarrassed to ask for payment! So, don’t apologise for having to raise this issue, your client should be apologising to you!
PPD: How might the approach differ approach if it’s a second or third call?
DW: With each call you are going to be taking a tougher and tougher stance with your client. You should be eliminating any excuses for non-payment with each call and so by the third call you will probably be threatening legal action. However, don’t make empty threats. If you threaten legal action you must follow through or you will not be taken seriously in the future.
David Walker is the founder of Grid Law, a firm which first targeted the motorsport industry – advising on sponsorship deals, new contracts and building of personal brands. He has now expanded his remit to include entrepreneurs, aiding with contract law, dispute resolution and protecting and defending intellectual property rights. David set up Cashflow Rescue as a low cost legal alternative for small businesses with debt recovery problems.