Working with Your Debtors to Get Your Money Back

debt collection

Credit: meddygarnet

With late payments, the key is to strike a balance between being polite and civil without being ineffective, and being assertive without being too threatening.

If you follow the steps laid out here you should be able to work very well with any debtor to get your money back, while maintaining a good relationship and the possibility of continuing business with them in future.

Your Debt Collection Mindset

Collecting money from people is similar to salesmanship and marketing. Understand their situation, and what pushes their buttons (through fear or promise) to dramatically increase the probability of them taking action and paying you.

Many business owners new to the game find it daunting to pursue debt, and almost feel like they’re being too threatening or mean. They hesitate to take strong measures. You must get rid of this mindset before you begin or you’re likely to spend a lot of stressful time spinning your wheels.

It’s your money, you have every right to go after it. They signed a contract with you agreeing to a certain date. So pursue without hesitation, and use whatever tactics work.

Decide Your Steps

First, decide your action steps, and when you will begin. And stick to this. So the moment you realize their payment is late send a gentle reminder, and then determine how long you will wait until the next step.

This way you’ll stop yourself worrying every day if you should do something more or not. And of course, your existing relationship with the client will make a difference in how much leeway you give them and how easily you can talk to them about it.

Become More Assertive

So your first step is a gentle reminder by phone or email. When their time is up, the next step is to make a clear demand for payment.

Here you want to make it clear that you no longer think they’re just confused and getting their accounts in order. Make it firmly clear that you either want the payment now, or a firm commitment as to when and how the payment will be made.

Include the date they should pay by, unless you talk and come to a solid agreement. Remind them exactly how to pay you. And clearly express what will happen if they do not pay by that date, which may be a debt collection agency (DCA) like PJCDS.

Talk, Listen, Understand, but be Firm

Depending on how large the contract is, contact your client and discuss it with them. Listen, and understand their situation. The more carefully you listen, the more they will like you and will find it harder to ignore your requests for payment.

Try to come to some sort of agreement that suits you both, such as part payment over time. And make it clear this payment schedule must be met. Often such leniency will be appreciated by the client, and may even help your relationship down the line.

But while you’re civil, also explain your situation so they understand the steps you must take. If you have already stated your procedure, involving a DCA, they will more likely accept this and not feel resentment towards you.

He who shouts loudest gets paid first” – Duncan Bannatyne

Put yourself in your client’s shoes.

Most often in these cases, the company is just going through cash flow problems, as we all have at some time or other. And they have to make a decision for every bit of revenue that comes in – do they put it into the business, pay their employees, or pay one of their creditors.

And which creditor to pay? This is how most people think about it:

“Well, the quiet one who never even mentioned the debt – they don’t seem to even mind the late payment, do they? But the other one who’s sending us emails, calling us, writing letters every day, who even came to visit the office and who appears to be very serious about setting a DCA on us – perhaps we should pay them first.”

Persistence Pays

If you persist, and keep at them, you’ll massively increase your likelihood of getting paid. And then you will also be less likely to have problems with that company in future.

And Finally, Withhold Service

One of the best ways to get payments, if your business relationship allows it, is to just withhold your service from them until they pay. Often the disruption to their business of just the threat of this will be enough to get them paying fast.

Always combine the calm, friendly approach with the gentle threat of a big stick – namely a Debt Collection Agency (DCA), and then even the Small Claims Court if it’s going that far.

But hopefully if you use this procedure, you won’t need either.

The best way to introduce a DCA is if you partner up with one, and all your clients know they deal with your payments automatically right from the start. Funnily enough, this makes it a lot easier to work with any debtor.


Scott Bryan is a financial blogger who enjoys explaining the arcane world of finance in everyday terms. Formerly a high street bank manager for over thirty years, he knows that everyone has unique requirements and so is dedicated to helping you find the right solution for you. He now works as an freelance financial writer when not consulting.

About Carson Derrow

My name is Carson Derrow I'm an entrepreneur, professional blogger, and marketer from Arkansas. I've been writing for startups and small businesses since 2012. I share the latest business news, tools, resources, and marketing tips to help startups and small businesses to grow their business.

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