Auto Service World
News   June 5, 2020   by Allan Janssen

Getting Paid: How to collect without creating hard feelings

Nine tips for collecting receivables without creating hard feelings.


 


By Jeff Mowatt


If you’ve ever experienced the awkwardness of having to call a customer to remind them to pay their bill, you know that you have to walk a very fine line of diplomacy.

Being a pushover won’t get the customer’s attention. And being too pushy can offend risking losing not only money that’s due, but future business as well.

Most of the training I do is on choosing words that enhance trust and differentiate your service to make price less relevant. You can use these same trust-building principles to gain cooperation with customers who aren’t paying.

In the automotive repair and maintenance world, quick access to the right components is critical. And as a jobber, you control that flow of parts. But how long should you let the flow continue when payment isn’t prompt and complete? That’s where strategy comes into play.

  1. Do your homework

Start by gathering details about the outstanding invoices and about how much overall business the customer does with you. Any large-volume customer isn’t going to be happy about receiving a collection call over a relatively small invoice. In fact, they may rethink continuing to do business with you if you adopt what they consider to be a petty stance. On the other hand, a first time customer with a large overdue bill should set off some warning flags. This is someone you need to contact sooner rather than later. When it comes to collecting, it makes sense to give long-term customers special consideration, and new clients a short leash.

  1. Begin with a courtesy email

The first reminder can be a friendly email sent soon after payment is due. Keep the tone light and conversational. Short is good, too, if you can ovoid sounding terse. Essentially you want to explain the situation without being too confrontational.

“Pat, I was looking through our receivables and noticed we haven’t received a payment yet on this invoice. I want to make sure you did indeed receive it and there’s nothing you need from our end. Thanks!”

  1. Stand up for yourself

If the email doesn’t receive a reply, it’s time to pick up the phone. This is an escalation of sorts, but it need not sound that way. You want to sound focused and professional. If you’re feeling anxious, stand up when you phone. Your voice will have more resonance and authority, and you will feel more confident and in control.

  1. Share facts, not accusations

Certain phrases can inadvertently sound like accusations and can put customers on the defensive. Telling people that they’re late or overdue sounds like a generalization. Instead give specific dates and encourage them to talk.

“Payment was due on the 17th and as of today we haven’t received it. Is there something about the payment I should be aware of?”

Your objective here is to listen and gather facts about your client’s business. Take notes if you have to. This isn’t the time to state a hard position. Instead, summarize your understanding of the facts you collected. Recap with softening words like, “So if I understand this correctly… ” A huge part of building trust with anyone is demonstrating that you understand their position fully.

  1. Empathize

If your client has indeed suffered a financial setback, you may need to let them get that off their chest. Summon all your empathic skills. Soften your tone, and prepare to listen. It might help to begin with two magic words: sounds like. “Sounds like you’ve had a run of unfortunate events. I’m sorry to hear that.” Those words make you sound humane and go a long way towards making late paying customers want to cooperate. Let them tell you their tale, and don’t interrupt with unrequested advice.

  1. Don’t make it personal

This may sound like the opposite of good management advice. Typically, we want to personalize our services by using the word “you” a lot, as in, “Let me check that for you.”

In the case of collections however, the last thing we want is for this to be taken personally. Now you have to draw a line between personal situation and professional responsibility. So rather than asking, “When do you think you’ll be able to pay?” you need to be more pointed. Ask, “When can we expect payment?”

Speaking of word choices, avoid asking if they “want” to pay by installments. Few people want to pay bills. What they want may not be reasonable for you. Instead, simply ask, “Would it be helpful if we set up a payment plan?”

  1. Express your “grand Intention”

If you are indeed dealing with a normally reliable repeat customer, explain that you value their business and want to help them through this. I call it expressing your Grand Intention. It sets a positive tone and implies that you’re interested in achieving a long-term mutually positive outcome. Again, the goal is for them to feel motivated to pay.

  1. Summarize your understanding

Before hanging up, clarify what you and the customer have decided. Make sure you’re both on the same page. This is a critical step, because you’ll avoid trust-destroying disappointments that can be experienced on both sides.

“For my notes and to make sure I have everything clear, here’s what we’ve agreed upon moving forward…”

Now, send them a written summary confirming what you discussed. That way if you end up in court, you’ll have documentation.

  1. Last resorts

If you conclude that there’s slim to no hope of collecting the money you’re owed, or if you no longer want to continue doing business with this customer, consider settling for less than the full amount. You may have a sense of how much they might part with. In most cases, you’ll be further ahead financially than if you sued them or engaged a collection agency.

This, of course, is not the preferred outcome, but it is a way for you to close the books more quickly, and move away from a bad situation.

These are perfect candidates for a year-end letter that informs them that you will no longer consider them active customers. This is actually a fairly common business practice. Once a year, you ‘fire’ one or two of your worst customers. These are individuals who create more stress than they’re worth.

“It appears you have not been satisfied with our services. Rather than prolong a difficult relationship, we think you might be happier finding a new supplier of auto parts. Good luck in the future.”

Getting paid should not be so difficult, and it is unfortunate when you are forced to resort to emails and phone calls – and perhaps even an uncomfortable visit – just to complete a normal business transaction.

But when the occasion arises, use your listening skills, empathy, and professional demeanour to prompt the best possible outcome.

 

Jeff Mowatt is a customer service strategist, and bestselling author, based in Calgary, Alta. This article is based on his book Influence with Ease. You can reach him at www.jeffmowatt.com.

 


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