Page 100 - Paulisms: Gold Nuggets for Small Business

lies. I found that calling round to the debtor’s home when he was out and saying to their wife that we were chasing debt was a strong motivator to pay the debt. My father-in-law used to ring in the early hours of the morning saying he couldn’t sleep, as he was thinking about the debt the person on the other end of the phone owed.
3.4.4 Collecting residential debt
When talking to tradespeople, some of whom I have mentored when they started out in business, I’ll ask, ‘What sort of terms are you giving your customers?’
They’ll say, ‘Oh, the standard 20th of the month.’
And I say, ‘Why?’
‘Because that’s what our terms are with our suppliers.’
I then say, ‘Why are you doing this? You cannot go down to
McDonald’s, and say, ‘I want two Big Macs, a Happy Meal, and I’ll pay you on the 20th of the month.’’
The McDonald’s Theory: I always think about the McDonald’s Theory on debt collection in the residential market. The terms should be cash on installation. It goes back also to quoting – to have it outlined at that point that payment must be made at the time of installation, delivery, etc. And if they haven’t paid there and then, or within a couple of days, you must chase them. The longer you leave it, the more likely things are going to go wrong. I used to see it a lot – if you didn’t get the money immediately and you didn’t chase the money, something would happen with the job. Sometimes people would make up stories about it, or sometimes things would actually go wrong (possession is 9/10ths of the law).
Then it’s the invoices that don’t go out for weeks. Why? Invoices used to go out within hours under my watch. The longer you leave it, the more