Although you may feel like applying some of Mike Tyson’s skills when chasing slow payers, truth is, we can’t, and, hopefully, don’t!
But, knowing the seven main reasons why people pay their accounts is invaluable knowledge. Because when you know why customers pay allows you to apply influence to make them pay more quickly.
So, what ARE these seven reasons?
1 – NeedIf you supply electricity to a business, account collections are easy. The threat to cut off supply gives you excellent leverage if needed. Same for any other basic needs … food, phone connections, etc.
2 – Honesty, Appreciation and ObligationThese are influencial factors but when “push comes to shove” and money’s short, they’re not much use as a collection tool.
3 – ConscienceYou can play with this one, but, again, if a customer has a cashflow problem …
4 – EmbarrassmentUsed wisely, this can be very effectively used. Click here for an excellent example.
6 – Physical SafetyBe honest, when you’re getting really “hot under the collar” (frustrated!) it’s nice to think about doing “something”, especially to some debtors, but this isn’t an approach I’d ever recommend! So, this is NOT an option. But now, to the best one of all ….
7 – The “How Do I Get Rid Of You” Factor
This is where ALL successful credit management systems begin and end. Being Hard To Ignore. Always there, expecting to be paid on time and simply asking for it if you are not. So simple, yet so powerful.
Focus on #5 and #7. They’re the effective methods. Because when you know WHY customers pay, you will know how you can influence them to pay you within your own payment terms.