Len Sklar, author “The Check is NOT in the Mail” has spoken several times at Bootstrapper Breakfasts. Here is a recent talk he gave where he stresses the importance of putting payment terms and the consequences on non-payment in writing, communicating them in advance, and ensuring that they are understood.
It all seems so obvious but have you actually done this?
Too many entrepreneurs are afraid to pick up the phone and see if it’s a quality problem or a slow payment problem, letting the situation fester until they become angry and less effective or staying ignorant of real defect in their offering that need to be addressed.
Prevent Collection Problems With Clarity on Payment Terms
Key points to story:
- Business manager asked patients to pay when services were rendered.
- He did not ask them to make payments on bills that were in arrears but did ask them to bring the account current at the next time that services were rendered.
- He stressed that they valued their business and anticipated that some patients would react angrily. He did not become angry in turn.
- He outlined the consequences and escalation path for non-payment after different periods of delinquency.
- He made sure that they understood the terms by asking if they had questions, which if any parts were unclear, and to stress aspects of the policy that patients often ignored.
- If you don’t discuss money before you provide your product or service then you are forced to discuss it after you have provided the product or service when your negotiating position is substantially worse.