How to get people to pay when they said they will

Has this ever happened to you?
You did the work. You sent the invoice. The client didn't pay. You chased them up. They promised to pay. They didn't? In other words, a broken promise to pay.

Most people will experience this. If you haven't yet. Wait. For you will!
Over the last few months we've been doing something a little differently at our clients. It's been an outstanding success in terms of getting second promises ... and these are promises that are kept.  Money banked.  In other words, many overdue accounts have been paid when we've sent out emails showing the first promises made, ones that HADN'T been kept.

The background
In his book Influence: The Psychology of Persuasion, Dr Robert Cialdini sets out 6 key principles of influence. A great book. The second of those principles is "Commitment and Consistency". To quote from Wikipedia "If people commit, orally or in writing, to an idea or goal, they are more likely to honor that commitment because of establishing that idea or goal as being congruent with their self-image. Even if the original incentive or motivation is removed after they have already agreed, they will continue to honor the agreement. Cialdini notes Chinese brainwashing on American prisoners of war to rewrite their self-image and gain automatic unenforced compliance."

Wording we've used
"I have to do a report to the Board on Monday next week on all accounts over 90days. Can I tell them that you’ll be forwarding the payment mentioned in the email below next week?  Please confirm."
or
"May I have an update regarding progress of this invoice?  I have to do a report to the Board on Monday next week on all accounts over 90days.  Please advise."
People are now paying
People are replying. And quickly. And ... they're paying. Because they'd said that they would (in earlier correspondence or over the phone) but hadn't. And they didn't want to be seen as inconsistent, either to us or (and probably more importantly) to themselves.

Additional posts.
did you hear about
how to get better payment arrangements
using psychology to collect more payments more quickly

How to get someone to pay your fees ... without having to ask them!

Most people, when they owe someone money, are extremely conscious of it. AND, if payment of that debt is also overdue, they will feel extraordinarily guilty. (If they don't, you may want to revisit your trading relationship with them.)  

So, if someone owes YOU money, use this to your advantage. Here's how ... Imagine. You're going to visit an important client. He has a substantial amount owing to you. In other words, an unpaid invoice - he owes you money.
Now, the forthright among us will have no problem asking for payment but many people DO - hence this post.  THAT'S who this post is for. It's about How to raise a sensitive subject with a client WITHOUT risking ANY damage to your relationship with them. Without creating any bad "atmosphere" that may damage goodwill and, ultimately, future business.

Try this ...

DON'T raise the topic!  Get the client to raise it!  

by either

* putting a hard copy of the unpaid invoice among other paperwork, or
* having a bullet-point list of topics that you want to discuss with him.  An agenda of sorts.

And then leave either (or both) in plain view. If your list of 'topics' is on the table in front of him, even though the writing may be upside down to him, he'll try to read it.  So, if something like "Invoice xyz - $12,000" is somewhere on that list, chances are HE will raise the topic --- before you have to. (It also means that you HAVE to raise the topic if he doesn't. Why? Because it's on the list!

Proof
* I received an email the other day ... "I am seeing Andrew tomorrow and will discuss his account with him then, as best I can".
* I replied to say ... "Easiest way (so you don’t have to raise the topic) may be just to print out a hard copy of the invoice and put it somewhere on the table where he can see it. Of course, if that “subtle ploy” doesn’t work, you WILL have to raise the topic yourself but, that too, will be much easier if the invoice is already out there!"
* The next day, another email came in ... "Thanks Michael, appreciate the suggestion! It worked. He paid!"

How to stop debtors stalling

Shock. HORROR!! When you're chasing slow payers, some of them will dispute something, anything in fact, but .... it's only to stall paying. They really have no problem with your account - they just want to buy time. To pay later.

One of our clients is a National Accounting Firm. This is how we got one of their debtors to tell us what their complaint was or to "shut up and pay".

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History
Invoice was sent out. Not paid on time. Two Reminder Letters sent out. Phone call reminder made. Client said "fee is wrong". Many emails, letters and phone calls made, not to get the payment but to find out what his complaint was. "I'll email my complaints", said the client several times. He didn't, so ... we have just sent him this letter ....

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The letter sent
Dear Mr Bloggs,
Your Account
According to our records, the following invoices are unpaid.
---27/06/2008---Fee 61234---$5,255.00
---30/07/2008---Fee 65678---$1,590.00
---24/12/2008---Fee 69012---$3,550.00
Three months ago, in a phone conversation with John Smith just before Christmas, you mentioned several concerns that you wanted addressed before you would be prepared to settle them. We have contacted you several times since then asking you to set out those concerns in bullet form either in a letter or by email so that we may look at addressing them for you.
In view of the amount involved and the serious ageing of those invoices we are now obliged to formally ask you, for a final time, to set out those concerns in writing so that we are in receipt of them by the close of business of Thursday, 02 April.
Please understand that if your account remains outstanding and we are not in receipt of your written concerns by the above date we will be obliged to revert to policy and pursue payment through other channels.

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Why this will work.
1: We are writing the Bad News - See speak the good news, write the bad news 
2: We are sticking to the ideal collection letter format that we looked at in bob - the builder (part 3)
------- paragraph 1 - state the facts.
------- paragraph 2 - say what you want the debtor to do.
------- paragraph 3 - tell the debtor what will happen if he doesn't do as requested.
3: In paragraph 2, we gave the debtor an unusual "pay by" date. a Thursday. It infers that something will happen on Friday if he doesn't complain or pay. Much, much stronger psychologically than "by the of the month" or "within 10 days".
4: Fear of the unknown is being applied.
------- "revert to policy" - what's that?
------- "Pursue payment through other channels" -what channels?