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If there are multiple outstanding invoices on your customer’s Statement then unfortunately my friend, you have a problem. When was the last time you cut off a debtor who owed you money? Said no when they asked you to do more work or provide more stock? Told them you’d only agree once they’ve paid you in full? If you’re like most small businesses the answer is never.
This, my friends, is a billion dollar question. And here is the billion dollar answer- they don’t NEED to. Create the need and you’ll be paid. How else do you explain the $2.5 million dollars we collected in 2023 within 1 day of receiving the debt. 1 phone call or 1 email. $2.5 million dollars. That’s right- they had the money all along.
We see a lot of invoices. At least few hundred each week. Most are templates from accounting software like Xero and MYOB. Some are handwritten. And almost every single one will have been issued with the assumption that the money will follow soon after. But have you ever thought about how much importance your invoice has on getting you paid? We’re here to tell you- a LOT.
Two weeks ago we were sent this large debt to collect from a large industrial company. There was no dispute and they had promised payment countless times to our client before we became involved. So I called them and emailed them threatening to serve a Statutory Demand. About 5 minutes later I received a call from their lawyer promising to pay the full amount that day.
The default approach for many people chasing money is the guilt-trip. Crying poor. Basically pleading for the money and explaining why you need it so badly. This is the worst thing you can do. There’s no doubt there is a time and a place for a guilt trip but it should never be at your expense. “I would never do this to you” is fine. “Because of you I can’t pay my rent” is not.
We had a call yesterday from someone who was owed $20,000. The invoices had been outstanding for over 2 months and every request for payment was met with an empty promise. In the last 2 weeks they’d stopped responding altogether. This lady was reluctant to push harder as she was worried she would lose them as a customer, a very common dilemma.
Stop Supply- why doing so is your best chance to be paid. It always astounds us when we get sent debts to collect which are made up of multiple invoices. If you’re owed more than 5 invoices for the same customer at any one time then this could be why you’re not getting paid. So many businesses think that by doing more work they’re increasing their chances of getting paid but it actually has the opposite effect.
Are you owed money by another business? You MUST do this before you do anything else: Obtain their ABN and verify what their business structure is. Knowing this information is absolutely vital if you want to get paid. The Australian Government’s ABN lookup site www.abr.business.gov.au is a goldmine. Run the customer’s name through that and do whatever you possibly can to find their ABN.
EOFY Demand template. Many people have asked us for this so without further adieu here is a demand you can use this week to hopefully get paid before Friday. Remember, to get them to pay, your customer MUST benefit. If they don’t then your invoice will just remain where it is, a problem for next Financial Year. Just add your debt amount next to the dollar sign and away you go.
“What is the absolute most you can pay today?” Our favourite question, bar none. If this nugget of gold isn’t in your collection repertoire, then you could be missing out on hundreds, if not thousands of dollars. When a debtor tells us they’ll pay it next week, we ask this question. When they say they can’t pay the full amount today, we ask this question.
The dreaded late fee. Loved if you’re the one charging and collecting them, hated if you’re the one paying them. But a late fee is a late fee right? Wrong. Whilst the concept itself is fine and we actively encourage the use of them, it is vital you do it the right way. Do’s: – Have a written agreement with your customer which covers the late fees.
First up today we have our gold medal winner, undefeated and the best by far- ladies and gentleman give it up for: The Telephone! The phone is your best friend folks. The single best way to get paid is by picking it up, calling your customer and asking for your money. Seems so simple I know but you would be shocked at how many people are scared of the phone.
When chasing payment, there are generally 5 contact methods used. They are: – The phone. – Personal visit. – SMS. – Letter. – Email. These are the big 5 and whilst there are others like Facebook messaging etc, you will almost always use one or a combination of these. Whilst doing nothing could still you get paid, you’re relying on someone else to remember to do something, so it’s never recommended.
Here you go folks. If this doesn’t get you some money in the next 2 weeks then nothing will. Feel free to use liberally and share with anyone you think will benefit. Just add your customer’s name, your bank details and the amount and hopefully watch the $$$ roll in. Obviously the $100 token payment can be increased if needed too. $100 is historically in our experience just the most common amount almost everyone has access to at any one time.
1. If your customer is a business, establishing their correct entity is a must. ABN Lookup is good for this but if you’re still stuck, the Terms and Conditions or Privacy Policy section of their website is also a goldmine. It’s almost always at the bottom of their homepage. 2. If they promise to pay, always confirm in writing and ALWAYS ask them to reply to indicate they agree. 3.
Anyone who has been in business for a while will know that we are entering the danger zone. The annual period where getting paid is like pulling teeth. Thankfully it is still mid November so there is still time to plan, prepare and cope. The best advice I can give you right now is this- be up front and honest with your customer and ask them, before you start work or provide the goods and services, if they are going to be able to pay on time.
“The telephone is your best friend! Don’t be scared of the phone”!!! I really wish I could shout this constantly from the rooftops to every business owner in this country. The amount of people who are petrified of calling their overdue customer is crazy. Just yesterday I received an email from someone owed $210 admitting they “were too chicken to call so I just email” This really does break my heart and I shudder to think of the hundreds of millions and millions of
This is a question we get asked all the time and our answer is always the same- absolutely you should. But give them one final chance and don’t ever give them longer than 24 hours to respond or pay. Short, sharp deadlines. The time for chit chat and niceties is over. You mean business and they can either pay you today or deal with the debt collectors tomorrow.
Everywhere I go, everyone I talk to, every business that I help I recite my mantra: “What is the absolute most you can pay today?” These 9 words are the reason we collect millions of dollars every year and teach others to do the same. Most people have the same limited mindset- full amount or zero. Everything or nothing. Almost nobody thinks about that enormous middle section- part payments.
One of the first things you should do if your overdue customer is also a business is identify their structure- go to www.abr.business.gov.au and search their name. If they are a Pty Ltd company then it’s worth doing a company search- what you are trying to find out is: – Who the directors are, bearing in mind they are often not the person you’ve been dealing with. – What their Registered Office address is (if it is their Accountants like most companies, then you can call
Demand emails- we see A LOT of them. Whenever we are sent a new debt to collect our client’s will include the emails they have already sent their debtor requesting payment. Obviously it hasn’t worked and it is almost always because of this reason- the sign-off is too nice. It is completely different to the body of the email- you have to be consistent.
Right then folks- there are mere days left. If you’re like most business owners, you want your bank balance at 30 June to be as healthy as possible. Here’s how to convert “Money owed” to “Cash at bank”. – Sell the benefits, for them, in paying you before 30th June. Closure and the opportunity for “a fresh start in a brand new year without this debt hanging over their head”.
Nope, you aren’t imagining things- it really is that hard getting paid at the moment! The old January hangover- happens every time. This January however seems to be worse than normal so if you are chasing outstanding invoices from last year, just know that you most certainly are not alone. So now that we have identified the problem, how do we fix it?
Everyone has dealt with an Arrogant Angus I am sure. Full of themselves, not short on confidence and always on the phone, they can be a nightmare to get money out of. Characteristics: – Massive ego. – Refers to themselves as a “disruptive entrepreneur” on their Linkedin profile. – Screens calls. – When they do answer the phone, it is with their full name only. – Says they will “get my accounts team to look into it” when you know for a fact it
I don’t like to have regrets in business- I think everything we do and everything we go through, good and bad, is a learning experience and life is way too short to live in the past. But there is something I did about 5 years ago that I still kick myself over. I was engaged to provide debt collection training to a major insurance brokerage here in Queensland.
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