Patience – An Under-Rated Skill In Collecting Money

Last week, I set down my procedures for collecting money. I started with setting up the account correctly, sending an invoice promptly, sending three statements and then using the telephone to collect money.

Some of you may say, “Well, this process is too long. I can’t wait 75 days to ring about an overdue account.” I can understand that type of thinking but patience in collecting money is worth it in the long run.

<--break->Firstly, it is unrealistic to expect every customer to pay your account by the due date. In fact, you don’t want them to. Being lenient in your account collection is a big advantage for your customers and will help you to get future business from them. It will be a big relief to some of your customers that if they are a few days late in their payment, they will be given the benefit of the doubt with a friendly reminder in the mail.

It is now school holidays in New South Wales. This means, the March 31 statements were mailed by high school students. They will also place an appropriate sticker on the statements. It is more economical for me to do this so the only phone calls I make are to those small number of customers who have failed to pay after receiving three statements in the mail.

This is where your patience is tested. I do not make one phone call and then threaten legal action. Instead, I listen carefully to what my customers are saying and respond appropriately. The only people I want to take to court are those with the capacity to pay but prefer not to pay. This is fortunately, a very small minority of customers.

In fact, when I ring those customers in 75 days, they genuinely want to pay but are either too disorganised to get the payment made or are short of money. At no stage do I make threats on the phone. Instead, I record details of the conversation and wait for their response. What I am seeking is a promise to pay. Some will pay when they promise to but others won’t.

Again, all is not lost when that promise is broken. If you can get a second promise, then this is worth getting. Your alternative is to take legal action and this is likely to take some time and you have the added difficulty of having to add the court costs onto your bill. For small accounts this can double the bill. Making several phone calls is still easier than taking legal action because it is quite possible that the next phone call is going to be the one that collects the money.

Here are three real life examples where patience won the day.

  1. A customer in New Zealand owed us $206.25 from July, 2009. For New Zealand customers, it takes longer for us to receive a cheque. Secondly, it is common practice for New Zealand companies to do their cheque runs on the 20th of the month. I first rung this customer on October 27. I was promised that my payment would be made in the next print run, i.e. November 20. It wasn’t and this process went on until I was finally told on January 29 that the owner will not release the cheque since the company is in financial difficulty.

    This created a problem for me because, NZ$206.25 is a little low to go through the New Zealand court system. Also, I would not be guaranteed payment if I did pursue legal action. Fortunately, at the same time, I received another order for account stickers from this company. I obviously put it on hold until the payment was made.

    In February 18, I finally got to speak to the owner of the business and he said he would pay if I sent him a credit note for the amount due and invoiced a new company. I did this and after two more phone calls, I received payment directly into my Bank of New Zealand account in Auckland on March 25, i.e. 8 months after the date of invoice. I kept a record of every phone call and counted 15 phone calls. Patience certainly won the day for me here.

  2. A local customer owed us $270 from December, 2009. On March 19, I rang this customer only to hear that the phone had been disconnected. This is never a great sign. Next, I sent a reminder by email on the same day. The advantage in this case was that this customer was local. On March 22, I went to my customer’s premises. He was not home so I left a statement with a pressure to pay sticker on it under his front door.

    At this stage, I was getting a bit concerned. Perhaps I should not have offered credit since this customer was also late in paying for his Christmas cards in recent years. What persuaded me to continue to offer credit was that this customer was local… making collection an easier task. Also, he had been a profitable customer since 2001.

    For this customer, I needed to act quickly. I got a business name extract from Dun and Bradstreet for $19.50. This gave me the residential address of the partners who were obviously husband and wife. On March 25, I visited their home address on my way to work but no-one was home. I left a statement with a different pressure to pay sticker on it in their letterbox. Note that I do not use a final notice sticker as I am still trying to collect this money without pursuing legal action. I am comforted though by the knowledge that I have the residential addresses of the owners of this business and that is all the Local Court needs.

    Once I have the full names of the owners of this business and their home address, I simply go to to get their home number. On March 26, I leave a message on their answering machine.On March 29, I did get to speak to the owner’s wife. She promised that her husband would post a cheque this week. He did. We received their cheque on April 1. For this customer, a lot needed to be done to get payment but we received it 13 days after the first phone call.

  3. A customer from Moree owed us $180 from November, 2009. I first rang her on February 23. She explained she had been sick for 3 months and needed a couple of weeks to organise payment. I granted her this request but when I next spoke to her on March 12, she said she had received some cheques and will pay us shortly. Then the problems really started. From March 19-29, I left several messages on her work phone, home phone and mobile phone but the calls were not returned.

    I purchased an ASIC Company Extract from Dun and Bradstreet for $21.50. It confirmed that the registered office was her home address which I had found from The problem is that this customer is a company and legal action is of no use if the company has no money. I faxed her statement with a pressure to pay sticker on it on March 30. Naturally, I was relieved when she called on that day with her MasterCard details. She was in hospital again so she could not return my phone calls.

The moral of these case studies is that patience is important in account collection. Also, it is important to treat each case differently. Do not have the same policy for each customer. Legal action is not always the answer. In fact, only in the second case would I have been confident in collecting money through legal action. The most important thing is to minimise the number of customers that need action over the telephone. It is time consuming so this is why I wait till 75 days… a time which allows most money to be collected by statements with stickers of gradually increasing severity.

Source : Small BIZ Tips Newsletter Volume 3 Issue 8 by Ian Renton

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