Collecting money from people is really just a form of salesmanship.

When you contact people about paying you money they owe, they are, understandably, going to be disagreeable. Their natural reaction will be to respond to your request for payment with anger, and you can end up in a nasty confrontation. Although it’s sometimes possible to argue a debtor into paying, it’s much easier – and more pleasant – to use the art of persuasion.

One technique is to start the conversation with the debtor by asking why he hadn’t paid.
There was always a reason.

Many had lost their jobs, had unexpected car repairs, or were fighting a debilitating illness that was draining all their financial resources. Others just didn’t know how to handle their money responsibly, and kept blowing their paychecks on things they really couldn’t afford. But it didn’t matter what the reason was.
Listen sympathetically, it shows you understand their situation. And that makes it possible for you to calmly and rationally come up with a plan for them to pay what they owe.

~Here are the basic steps to collecting what’s owed to you, whether it’s a business or a personal debt:~

>Determine when you’ll start to take action against the debtor.
You don’t want to bring down the hammer on a friend who borrowed 20 bucks just because he hasn’t paid you back within two weeks, or on a good customer just because he’s a little late with a payment. As soon as you start going after your money, your relationship is going to turn into an adversarial one. So, chances are, you’re going to lose that friend or customer.But at some point, even in cases like those, you’re going to have to try to collect. The question is when? After 30 days? 60 days? 90 days? Every situation is different, so you’ll have to decide what makes sense.

>Contact the debtor with a gentle reminder.
Your first contact with the debtor should be in the form of a gentle reminder, either by mail or on the phone. Say that you’re just making he’s aware that the debt hasn’t been paid. This approach allows him to save face by claiming that he “didn’t know” or “forgot.” And, in fact, a certain percentage of debtors will pay up as soon as they realize that you don’t intend to let the debt just vanish.
If the gentle reminder doesn’t work, the next step is to demand payment.

>You’re no longer pretending that you think the debtor may just be confused. No need to be hostile, but make it clear that you are rightly owed the money and you expect either (1) to be paid immediately or (2) a definite commitment as to when payment will be rendered. This will work with all but the most difficult debtors: those who honestly don’t have the money or those who just don’t feel like paying.


>If that doesn’t work – or if the debtor doesn’t keep his promise to pay by a certain date – you have to take an even stronger approach. If he just doesn’t feel like paying, you have no choice. You’re probably going to have to take legal action. But if he’s simply overextended and doesn’t have the money to pay all the bills he owes, you have to get yourself to the top of his list of priorities. How do you convince him to pay you before he pays someone else? By constantly contacting him – by phone, by letter, through e-mail, and maybe even by knocking on his door. Your persistence will pay off.

Collecting money isn’t fun, but you can be assertive without being threatening, and civil without being ineffective. It’s your money, so there is no reason to feel reluctant about using bold tactics to collect it. And not having to write off losses from bad debts can make a significant impact on your balance sheet.

Cc: lalatislala