Page 99 - Paulisms: Gold Nuggets for Small Business

This is where it goes wrong for so many people, because so many people don’t like debt collection. Collecting debt is an art – whether it be business- to-business or business-to-customer. Most bad debts occur because of lack of speed of recovery or bad management – the majority are through bad management. Reflecting over 30 years, when we were hit it, was because we didn’t manage the debt. Most of it came from the commercial building sector, a couple of which exceeded $100,000.
In the commercial area, if payment is due on the 20th of the month and is not received by the 21st, you should be calling the client – on the phone, not through email – asking whether the payment is going to be made. One ploy I used to use was that before the 20th, I would just ring up, and say, ‘Hey, just checking that we’re in the cheque run.’ The term ‘cheque run’ isn’t used so much these days, but basically it’s to see if we were in their books for a payment. Take note of when they say they are going to make their payment and register that in your debtor’s ledger. So, come the day following that date, if they haven’t paid, then you ring them up again. It’s like the squeaky wheel.
Quite often, we just let things go if they said they are going to pay. But probably 50% of the time, people won’t pay when they said they were going to because they are waiting on cash to come in themselves or are playing games. It is a game. Make sure that you keep chasing – no one likes people chasing them, but the secret there is to telephone and to make notes and then follow up on those notes or those timeframes that have been promised. Too often we assume they will pay when they often don’t. Never assume (see Part 3: Chapter 1).
Sometimes you need to get the mongrel out. I had situations where we did dawn raids on sites with security guards chasing us as we ripped product out. I hated smart arses who would not communicate and told