Back when my wife and I started our business in our garage, I tried several different methods of collecting overdue bills. I tried threats. I tried guilt. Didn’t work.
But the “Mom and Pop” approach worked. Here’s how I talked to a customer that owed us money: “Hey, Fred, this is Steve. Golly, we have a tough problem. Our business is small, just my wife and me and one employee. Our payroll is next Friday. We really need your help. Could you get your account paid right away?”
If the customer said he was in a fix, I would be a friend, full of understanding, and say, “Yes, Fred, I realize you are also in a jam. The thing is we were counting on you and we already paid for the product we sent you. Is there any way you could borrow the money and get us paid right away?”
Often that worked. Sometimes Fred would say he couldn’t borrow the money.
Then I would say, “Gosh, I understand. Everyone is up against it these days. Could we charge it to your credit card?”
Often that worked. But Fred might say he was up to his limit.
My response, “Yup, Fred, we are all up to our limit. Let’s see if we can work out a plan that makes sense for both of us. How much of it could you pay today?”
He might say “one half” or “one third.”
No matter what he said, my response was always, “Wow! That’s great. That would help us out so much! Could we charge that to your credit card?” If not, I asked him to wire the money. If that did not work, I asked him to mail a check. At any rate, I was always grateful, not threatening.
Threats and guilt never seemed to work as well as the good old “Mom and Pop” approach.
You may be thinking, “Well, Steve, that’s cool for a small business, but I have a big company.”
Well, we grew from zero to 600 employees, from zero to $60,000,000. We used the same approach. We had 30 customer service representatives. We taught them to use the “Mom and Pop” approach.
“Golly, Fred, we have to meet payroll next Friday. We’re in a real bind. Could you help us out? I know you are in a jam, but so are we. Let’s work this thing out together. Could you borrow the money?”
And so forth. The sequence of events was the same. And our collections were fantastic!
Source: Steve Savage
Yesterday the amount of trading on the wholesale market reached $ 17.6 million, twice the average daily this year.