A few months ago I was having dinner with some businesspeople before I was to address their group on improving their collections. While speaking with one of the franchise owners I overheard the following comment:
“If someone owes us money, I go to his office, grab him by the neck and hang him out of the window until he agrees to pay!.”
He was kidding of course, but he understood the first rule of collecting money:
Do what works. When you talk to someone who owes you money, look for what will make that person put your bill on top of the pile.
First, determine what exactly is preventing them from paying. What are the obstacles to getting the money?
Are they having cash flow problems? If so, root for their success while determining when money is scheduled to come in the door, so you’re the first to get paid.
Is there a contract dispute with the creditor? Look for a way to solve the problem.
Are they trying to fight their way through the internal bureaucracy? Help them move through it.
One benefit of having a lawyer handle your collection matters is that some people will take a call from Attorney Jane Woodworth where they wouldn’t from Jane Woodworth. Having an ESQUIRE after your name, often translates into instant credibility – or perhaps instant fear.
It’s not enough to be an attorney though. You also have to be creative. You have to consider the needs of your client. Can you salvage the business relationship? Does your client want you to? Will filing a lawsuit result in the debtor declaring bankruptcy? Is it worth more to settle for less today than it would be by waiting two years for the full amount? What is the appropriate balance between the clients’ need for cash flow and the time spend haggling?
Conversations with the debtor should be geared to finding the pieces of the puzzle. There’s no such thing as one-size-fits-all when it comes to collections. Even for a single client, one debt may require careful hand holding to preserve a crucial supplier relationship, while the next might demand a strongly-worded letter.
Figure out what works and then do it!