How to Make Sure You Don t Have a

How to Make Sure You Don’t Have a Debtor Problem in the First Place!

You’ll discover: • Some new ways of doing business • Why it’s important to do something • Before you have something to lose 1

You’ll discover: • A way to secure payment up front • Understand a weird quirk about value • How to keep it rolling in unannounced! 2

One way to avoid debtor issues: • Don’t offer accounts! • Can be done • Still need to make it easy to buy 3

One great way is to position it like so: ‘How would you like to pay for that? Cash, cheque, or credit card? ’ 4

Some new ways of doing business: Debtor problems require 2 strategies. • 1 st: Stop re-creating the problem. • 2 nd: Recover what you’re owed. 5

Consider this: • Debt can be created only if you do work BEFORE you get paid. • What if you insisted on starting work only AFTER you were paid? 6

Consider this : • While it might seem difficult, many businesses are doing just that! 7

Consider this • Allows you to confront the issue up front • Before you’ve invested hours of effort • Before you really have something to lose 8

Consider this : • • Consider partial payment up front Deposits Or an ongoing payment plan Builds a routine with customers 9

How do you establish this? • Spell out benefits • Articulate your abilities • Offer something distinct 10

Examples: • Offer a guarantee of performance. • Or ‘cash on delivery. ’ • Refer to later example in your Topic Handout. 11

Examples : • Make it ‘company standard. ’ • Ensure clients understand ‘what’s in it for them. ’ 12

Another way to secure payment up front: • • Offer a ‘membership’ Includes special privileges Or advantages For ongoing or advance payments 13

Discuss with clients: • Your list of preferred clients • How to get on that list • What that entitles them to 14

Discuss with clients: • When customers understand advantages • You’ve created ongoing inflow of funds • Create your ideal scenario • Ensure it adds value to the clients also 15

Understand a weird quirk about value ‘Namely, the value of any service declines after delivery. ’ 17

Understand a weird quirk about value : • Before delivery—we want it! • Eager and waiting. • Afterward, more likely to take it for granted. 18

Understand a weird quirk about value: • Particularly true if payment hasn’t been made. • Devalues the item or service. • Debt collection then becomes more difficult. 19

Understand a weird quirk about value • • Converse is true When customers pay in advance Or through a payment schedule They are more likely to appreciate the item 20

What to do right now? • Before you establish a system like that • Adopt some easy changes now 21

Example: 90 days 60 days 30 days 7 days Current 22

This creates the problem! • Remove this from invoices or statements. • Broadcasts the fact that people can pay late. • In fact, up to 90 days late! • Adapt an alternative. . . 23

Example: ‘Thank you in advance for fixing this quickly. It really does help us both reduce the paperwork pile and become even more productive. I appreciate your help with that. ’ 24

Alternatively: • • Use ‘due now’ ‘Overdue now’ ‘Due on September 14’ Or a combination 25

Keep it rolling in as arranged! • Use ‘direct debit’ funds transfer. • Or ‘periodic payments. ’ • Transfers funds from your customer’s bank directly to yours on agreed dates. • Easier for everyone. 26

Keep it rolling in as arranged! : • Establish ‘until further notice’ agreement. • Customers continue to pay ‘until further notice. ’ • Decreases time spent collecting debtors. • And provides a more even cash flow. • Increases ease for customer. 27

Some examples: • Refer to your Topic Handout • Draft a letter establishing monthly payments • Another describing it ‘matter of factly’ • Adapted to suit your business 28

One last thing—just do it • • You have to want to do it. All it takes is ‘positioning. ’ E. g. , ‘This is how we do it here. ’ Payment schedules or advances become the norm. • Test it and see! 29

How do you apply this to your business? 30

Your Action Plan: 1. Consider asking, ‘How would you like to pay for that? ’ 2. And establishing a membership. 3. Remove ‘current, 30, 60, etc. ’

Your Action Plan: 4. Speak with your bank about ‘direct debit. ’ 5. Get ‘matter of fact’ about it. Review letters here and adapt to suit. 6. Talk with me if you need any assistance in this area. Further information is available.