Running any business is a challenge. You have to come up with a product or service people are interested in, then convince them it’s worth paying for. Unfortunately, this isn’t where the journey ends. Sometimes, the customer is convinced, has collected the product or used the service and then refuses to pay for it. This could happen in any business – a restaurant, a wholesale supplier, a rental premise – any scenario where customers pay after the fact has the potential to turn problematic. If you’re not careful, you could spend significant amounts of time chasing after cash. So, what can you do to get out of this fix?
1. Check again
Once in a while, the cheque really is in the mail, so before you decide someone of refusing to pay, check your records twice, or even three times. This – of course – implies you’re keeping records, so maybe that should be the first step. When you make that sales agreement, have everything in writing. Note down the product / service purchased, the amount owed, the terms of payment, due dates, and consequences for non-payment. Look through your records at the start and end of every day, just to be sure it’s up to date. You don’t want to accuse someone of absconding only to find their cash sitting pretty in your account. It could sever your relationship with your customer and interfere with future deals between you.
2. Ask them why
When someone promises to do something for us then refuses, our human reaction is to get angry, take offence, or be disappointed. In business, we frequently have to combat our natural reflexes. If we acted on every impulse, we’d soon be out of business. This is especially important when someone owes you money. You have to suppress the urge to take it personally. That slight detachment helps you look at the situation objectively and be more rational in your approach. Now that you’re calm, ask your debtor why they won’t pay. Do they have a problem with the product or service? Have they lost their job? Are they busy chasing their own debtors? Knowing the reason can help you formulate a workable plan.
3. Try to renegotiate
It can be difficult to put yourself into the shoes of someone who owes you money, but it’s the best way to resolve the situation. Ideally, you want your cash right away, especially since the due date has passed, but it’s better to get a portion of the money than none at all. Find out if the debtor is willing to stagger out the money. Ask how far they can realistically spread out your payment, and how much they can afford per instalment. Once they’ve agreed, go over the payment terms again, and be aware you may need to have this conversation a few more times before you get your money. Agree with them that you’ll send scheduled notifications, and how often these reminders should come. This prevents later accusations of harassment.