Successful Debt Collection
By Les King
Published by Les King at Smashwords
Copyright 2011 Les King
Introduction
Successful Debt Collection is presented by Les King, a small-business entrepreneur who also has a background in computer programming, systems design and IT consultancy.
He is currently owner and manager of Eurofile IT Recruitment Limited who specialise in the placement of Information Technology personnel and also provide a PC/network support service aimed at small businesses.
Other business interests have included the management of a ‘property maintenance’ company and consultancy in ‘presentation skills’.
In these hard times, it’s difficult enough to secure new business without having to worry about the issue of getting paid.
Only a small percentage of customers create problems in this area and most do so as a result of inefficiency or temporary cash-flow difficulties, rather than deliberate intent.
Sadly, there are a small minority who never pay for goods and services if they can possibly avoid it, causing disruption and unnecessary cost out of all proportion to their numbers.
However, with some basic precautions and simple strategies, the risk of bad debt can be minimised
Table of Contents
Chapter 1 — Who’s the Client
Chapter 2 — Get it in Writing
Chapter 3 — Giving Credit Where It’s Due
Chapter 4 — State the Payment Terms
Chapter 5 — Anticipating Problems
Chapter 6 — Invoicing Procedures
Chapter 7 — Excuses! Excuses!
Chapter 8 — Collection Strategies
Chapter 9 — Other Options
Chapter 10 — In Conclusion
Appendix 1 — Sample Collection Letters
Chapter 1—Who’s the Client?
In the early 1990’s, I managed the ‘back-office’ of a successful property maintenance business for just over 3 years, before selling-out my interest.
Although this was a totally new direction for a computer person, my background in systems analysis and small-business management made the administrative side of the company pretty straightforward.
From the launch of the business, I decided to pursue a ‘professional’ approach in a market sector which, to be honest, doesn’t really enjoy a good reputation though this is often due to poor organisation rather than any deliberate intention to defraud.
While the concept of ‘rogue traders’ taking advantage of customers gets quite a lot of coverage in the media, you don’t hear a lot about those ‘rogue customers’ who deliberately set out to rip-off tradesmen.
Building and associated trades are fairly high-risk areas when it comes to getting paid.
You wouldn’t think that a bunch of beefy builders would have any difficultly in collecting their just desserts but the fact is that my co-Director and his artful artisan colleagues were quite intimidated by ‘men in suits’ and upmarket ladies with ‘plummy’ accents.
I am not sure if this would happen in the United States or other countries but, in the UK, it’s a ‘class’ thing—though there’s nothing classy about failing to pay your debts.
“Not Me Guv”
One of the very first debt-avoidance scenarios I came across arose from an ‘emergency’ call which involved a burst water pipe.
Having turned-off the water and repaired the leak, we were then asked to perform all sorts of remedial work using only the best materials—‘designer’ wallpaper gold-plated taps, etc.
Sadly, when we presented the bill, Mr Client announced that ‘”it’s not down to me, it’s down to the insurance company”’ though, of course, the insurance company had not been consulted on the matter of what repairs should be carried out or by whom.
In sales terms, we had failed to identify the ‘decision maker’ and the client was clearly trying to maximise his profit from the incident while leaving our company to absorb any shortfall not covered by the insurers—similar experiences included scenarios where ‘the landlord’ or ‘the managing agent’ were ultimately responsible for payment.
Who Said What to Whom?
At around the same time, we were invited to quote for repairs arising from fire damage caused by a previous tradesman.
This was a classic ‘middleman’ scenario where an ‘agency’ advised on interior design and then commissioned various suppliers to carry out the work.
The first mistake occurred when my colleague verbally quoted “about £300” for the work—what he meant to say was “£300 plus materials plus VAT”.
The second ‘faux pas’ occurred when the ‘lady of the house’ asked for some additional work and this was carried out without any reference to our actual client (i.e. the agency).
Not surprisingly, when we submitted a bill for nearly £700, the agency sent us a cheque for £300 which was the agreed price and suggestions that we had carried out additional work were vigorously denied by the end-client whose wife had become conveniently unavailable for comment.
This is a typical situation where the client probably hadn’t set out to rip-off the tradesman but was happy to seize the opportunity arising from the confusion surrounding the project.