Don’t be afraid: Why it’s okay to collect debt
Ever ‘brushed something under the rug’ simply to avoid an argument? Don’t want to deal with the hassle? The conflict? We’re all guilty of it. Nobody likes conflict! That’s why the number one reason trade business owners don’t collect debt is because they’re afraid of conflict.
Some are scared the client will kick up a stink, and ultimately leave them. They’ll never get their money and they’ve lost a customer.
However, you need to keep in mind you’re running a business. A business needs cash flow (customer payments) to continue running. That’s your hard-earned money! It’s time to realise there are important reasons why you shouldn’t think twice when collecting debt.
1. Debts can ruin your cashflow
Outstanding customer payments can cause your cashflow to destabilise.
The bills will pile up you won’t be able to keep up with expenses, and ultimately, it could lead to business failure!
A continuous and steady (stabilised) cashflow will help your business operate (and continue to!) in optimum condition!
2. Failure to take action ASAP produces bad results
It can become even more difficult and time-consuming if you delay collecting your debt!
In our own plumbing business, we collect payment from residential clients upon completion of the job payment via credit card or cheque at the end of each job.
For strata clients who have accounts with us, we call them and send multiple reminder letters until their account is paid. If it is still unpaid, we then escalate it and turn to debt collectors and lawyers.
If we did not start this payment process a) upon completion of the job for residential and b) the day after completion of the job for strata, it would take us way longer to collect payments than it already does!
And, the longer the payment goes unpaid, the less chance there is of you getting the full amount due or even any of it!
3. Customers have other bills!
Don’t kid yourself by thinking you are your customer’s top priority when it comes to bills!
They’ve got a multitude of other debts to pay (electricity, food, water, mortgage, etc.) before they might even consider paying you!
Make sure you’re receiving payment upon completion of the works to ensure you are the priority!
If this is impossible, what can you do to make yourself stand out in the piles of bills on their kitchen bench?
Create a sense of urgency. Use bold red text. Coloured paper. Send multiple letters a week. Whatever it takes!
Don’t be afraid of confrontation! Embrace it!
The customer has employed your services and understood when doing so that this would cost. Don’t be afraid to collect your money!
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