Blogging And All That Malarkey

The most effective debt collecting email I ever wrote

Running a small business means that I divide my time between the things that I love doing (project planning, designing and dealing with people) and the things that I don’t enjoy so much (business planning, accounting and dealing with (some) people).

Along the way, one of the facets of business that I've had to learn is how to handle those very rare occasions when people seem reluctant to pay promptly. Oddly late payers are rarely those who owe thousands, but instead owe very little for tasks that take only a few short minutes or hours to complete.

If you're unlucky, what at first might seem like a slice of bread and butter, can become a long and drawn-out series of repeat invoices and statements, phone calls, emails or reminder letters. You might, in the end, spend more time chasing payment than you spent on the task. With every email or phone call that goes by, your profit diminishes.

To me, late payment is rarely an issue about money and more about a lack of respect. This is particularly true if you are unfortunate to work with people who expect you to respond quickly to service their needs, but don't apply the same standards to yours.

Several weeks ago, my debtors sheet listed three customers with invoices that were outstanding over sixty and, in one case, ninety days. I thought about how best to handle this potentially awkward situation? Should I stick to the conventional path of statements and reminders that would drain my time and energy and divert my attention?

I chose to abandon a stiff business approach and instead write one email, carefully worded to express how I personally felt. After-all, business may be business, but people work with people.

Hi [..],

A quick note to say that I am really disappointed that you have still not paid me the [..] that I'm owed for the work I did for you. In the grand scheme of things, it's not a lot of money, but actually I think that this is more a matter of respect.

I have always been there at the drop of a hat to sort out any problems you might have. I love working with you and have always taken our relationship as more than just client/supplier. But if I can't rely on you paying promptly or it takes several attempts and reminders to get my money, that's not good business.

I'm not saying that I don't want to work with you, I do. But if I don't receive what I am owed within the next couple of days, I will have to think twice about helping you in the future.

Kind regards

Andy Clarke

This proved to be the most effective debt collecting email I have ever written. Every client settled their account within two days, while two telephoned to apologize within minutes of receiving my email.

This exercise taught me that even the trickiest situations can be handled better and resolved faster by plain, honest speaking.

Leave your comment

jeff white

January 28 2009 @ 09:23am #

It’s a little more confrontational than the tactics I usually employ, but I can see why it would work: it shames them very subtly, and the threat of non-timely response the next time they need you is powerful.

Nice work.

Pete

January 28 2009 @ 09:26am #

I find that reminding them that I can see how much revenue the site is generating and the fact I also host the site can also quite effective.

You are right though, it is a lack of respect or at least an expectation that “I” will bend over backwards and “they” will pay me when they are good and ready.

One additional factor to consider though is that often we might deal with part of an organisation that isn’t responsible for sending out the money. I’ve come across countless situations where my “client” assumed I had been paid whereas their accounts dept. was arsing around and employing delay tactics. So my advice is as well as a nice letter to accounts, mention it to your direct contact too.

Jason Cale

January 28 2009 @ 09:36am #

I like it, thanks for sharing Andy.

Marcus Neto

January 28 2009 @ 09:40am #

I had to write a letter like this not too long ago. I approached it similarly but I also added that I would shut down all services if I did not receive payment within 7 days. They paid promptly. It sucks to have to write those emails though.

Antoine E Butler Sr

January 28 2009 @ 10:04am #

Yikes, I wish i had the bawls to say that - that sharply. Honestly it comes off to me as completely appropriate, but from a client perspective seems very confrontational.

But hey, you can’t argue with results. Maybe I’ll put a little more thought into how biting my collection emails are in the future.

Andy Clarke

January 28 2009 @ 10:05am #

@Pete @Marcus Neto: I used to find it hard to write emails and address problems like this too. With this email I wanted to explicitly not sound threatening (shutting down services) as I think that can be the kiss of death to a working relationship. Instead, I found it effective to say politely but firmly that I wanted to be treated with as much respect as I have shown to them.

@Jeff White: You found that confrontational? I’d love to read your take on it if you feel like sharing?

jeff white

January 28 2009 @ 10:13am #

@Andy Only a little. There’s a slightly negative vibe to it, that I usually try to avoid unless I don’t want to work with the client again.

To be honest, in five years of business, I’ve only run into the situation a handful of times and most times, I usually resort to a phone call rather than an email. Seems to work better if you can call them. If you can’t reach them, then a letter similar to this would work.

Sulcalibur

January 28 2009 @ 10:29am #

I find that emailing them the words “I know where you live” works well. If they still don’t pay then sending over a few choice photos of them doing their daily stuff always does the trick ;)

Adrienne Adams

January 28 2009 @ 10:31am #

Brilliant!

It’s amazing how often we’re reluctant to just say the things that need to be said in a business relationship—or a personal relationship, for that matter. You’re using “I” statements, telling the person at the other end how you feel, and I think that’s much more effective than accusing or threatening.

I’ve been lucky to only have one client consistently pay late, and I wish I’d taken this approach with him. He would have been shocked to think that someone thought that he was being disrespectful.

I think this type of “businessman” is really just a bully. Bullies can thrive under the cover of politeness, but they’re supremely concerned about how others view them, and I can see how this type of subtle shaming could work wonders.

Thanks for a great tip.

Pete

January 28 2009 @ 10:32am #

@Andy I always remind them in the politest way and never mention that anything will be shut down. Generally they put 2+2 together themselves.

Out of interest who, if anyone, here charges interest on overdue payments?

Andy Clarke

January 28 2009 @ 10:42am #

@Pete: “Out of interest who, if anyone, here charges interest on overdue payments?” — I never have, mainly because of the extra administration overhead that might cause.

@Sulcalibur: ” find that emailing them the words “I know where you live” works well [..]” — And I suppose you also tell them you have a large Alsatian?

Marie Poulin

January 28 2009 @ 01:15pm #

The worst experience I ever had:
The client didn’t pay for one year, after many requests and reminders. So… I let the domain/server space expire. Sure enough, I get many emails, demanding that I give them the site back, or they won’t pay. They say: “I have a check for the remainder owing but I have some obvious concerns- no website. I would prefer to have everything up and running before I mail your check.” and “what are our guarantees we will receive the home pages if we mail the cheque first?”

So after many emails back and forth, with both of us expecting the other to pull through, I write:
“It is disappointing that you and the clubs’ committee do not take into account my good faith in completing this website without being paid any amount in advance. To now withhold the balance payment due on what we initially agreed to demonstrates that the club and yourself have not acted in the same good faith.

As of today, I will not respond to any further emails.
I will not accept the balance payment due to me from the club.
The files will not be re-uploaded.
I will write off the balance due me from the club as a bad debt on my income tax statement for 2007.
I now consider this matter closed.”

Its really sad when things get sour, but it was worth letting go of the small sum of money for the principle of it. As you said, its about respect. Your letter was very maturely worded, I may have to reference it in the future, thank you!

George Coghill

January 28 2009 @ 01:52pm #

I like this, thanks for sharing. I am in the middle of the rigamarole of a client not paying and this is just what I needed to see.

I’ll need to tweak it, but I like the general approach.

It’s odd, but I when I have been stiffed (which isn’t often), it has always been by larger firms/companies. I’ve found the small biz folks I work with out there to be prompt and pleasant with payments. Never had to collect on any of them in 10+ years.

Richard

January 28 2009 @ 02:01pm #

This article frames the issue of respect beautifully and has produced a very timely penny dropping moment for me. I cringe when I have to send out reminders to ‘forgetful’ clients. And I often worry about being (wrongly) labeled as money-obsessed.

So yeah, this has flipped a switch in my head really. Getting to see the wood in the trees for the first time in ages, I can see that I’ve not been really hung up about the money - it’s the feeling that my good nature’s been taken advantage of. Which in a weird kind of way, has made me feel a whole lot better. So thanks for that!

Bengo

January 28 2009 @ 02:30pm #

Some people handle money poorly and others handle paperwork poorly. I’ve kept different letters for different clients.

I would send this to distracted, neglectful people.

About ten percent of people flip out over pressure. These do best with a respectful person-to-person handwritten note, for me.

Didn’t know you had to be a psychologist too, did you?

Clare the milk lady

January 28 2009 @ 05:52pm #

Authentically felt, honestly and directly communicated. You must have an amazing therapist. ; )

izzat aziz

January 28 2009 @ 05:59pm #

i think you should work with that (some) people.
it really wasting time to deal with them.
btw, if i the one who received that email… even me will pay the debt. nice one.

Sulcalibur

January 28 2009 @ 06:18pm #

@Andy Clarke - Alsatian’s are beautiful dogs, most of the time very friendly and loyal. I used to have an ex train police dog. Someone gave it to my dad because it was too soft lol. But anyway, that’s quite off topic.

On topic now. The letter is great as it shows compassion, authority and throws in a good dose of guilt for good measure. All the right amounts too. Thanks for the advise.

ben

January 28 2009 @ 06:57pm #

It’d be interesting to see if this works with repeat offenders. My feeling is it would be progressively less effective, though I guess when it gets to that point, it’s a sign of deeper problems in the business relationship and is probably the signal to part ways.

Simon Rudkin

January 28 2009 @ 07:46pm #

Absolutely tremendous approach, and given me a perfect pointer of how to approach a similar situation. Also given extra weight by Andy Clarke being by far the fastest paying client I’ve ever had…

Edd Couchman

January 28 2009 @ 10:44pm #

It’s a great letter; it’s to the point and makes them realise that it isn’t a company-company problem but a person–person one.

As a general point, to everybody, I wouldn’t recommend taking down a client’s site no matter how tardy their payment. Why would they pay for something that no longer exists and that is no longer making them money? Would you?

Staffing Services

January 29 2009 @ 01:08am #

That’s a wonderful mail.I will use the same for my clients too.Thanks for sharing Andy.

Chris

January 29 2009 @ 01:16am #

I’ve been in business for 2 years now and have yet to be faced with a situation where I would need to resort to writing an email like this. That being said should the day come I’ll be /copy /pasting yours :) Great job.

Martin

January 29 2009 @ 04:13am #

Thanks for putting this up. I have a customer that always pays when he feels like it. I sent him this with a few modifications and he replied within minutes and sent another order with an upfront deposit. : )
Thanks!

Terry Ng

January 30 2009 @ 07:35am #

Very nicely put letter.

Amy

February 2 2009 @ 03:28am #

Great letter!

I (luckly, thankfully, happily) haven’t run into this problem yet so I am more than over due myself for having to write one of these letters. Polite and appropriate! Even though I’m sure we all secretly agree with Sulcalibur…........

I#8 • Sulcalibur
Jan 28th 2009 • 1:29 am
I find that emailing them the words “I know where you live” works well. If they still don’t pay then sending over a few choice photos of them doing their daily stuff always does the trick ;)

Jono

February 2 2009 @ 11:26pm #

A lot of us get stuck in similar situations and not many of us like to be the ass asking for money. This is the best possible approach that I have come across thus far. Ctrl+c, ctrl+v. Thx ;)

François

February 3 2009 @ 01:46am #

Hi

The Google Ad for automated debt collection software just below the post could be funny if it was not a symptom about how much things have to change yet…

rick

February 3 2009 @ 02:59am #

I’ve always used a fake person for receivables. An alterego.

Greg was his name. Fake voice. Alias email.

Greg was not a nice guy.

“Ok, well you’ll have to talk to Greg”.

NO ONE wanted to talk to Greg.

Kristen

February 3 2009 @ 03:05am #

This is empowering! Thanks for sharing. This kind of thing can be extremely tricky.

Peter Spook

February 3 2009 @ 03:10am #

What I like most about your email is it takes away tension, yet sets clear boundaries. I think people get very anxious when they have debts that go unpaid and so they’re more likely to avoid contact, and they’re certainly unclear as to where they stand with you. That email provided boundaries and clear understanding of where you stand on the topic, and where they stand presently. Great advice!

York

February 3 2009 @ 03:59am #

love it, love it, love it

Alexis

February 3 2009 @ 04:17am #

This just came in so incredibly handy. Thank you very much for sharing!

Tom Myer

February 3 2009 @ 05:15am #

Amen, and again I say amen. When I look over my list, the ones who always pay late are the ones that share that little slice of Venn-diagram heaven: oh my gawd firedrill drama but only just a few billable hours at a time.

It’s like they know that I won’t go to the ends of the earth to chase down a $200 or $500 invoice….so again, like others here, I thank you for a handy template….I just never thought of using the shame paradigm.

Stroller

February 3 2009 @ 05:49am #

@Andy: I don’t know that “confrontational” is quite the right word, but I would make just a subtle change.

The phrase “actually I think that this is more a matter of respect” seems to accuse the customer of not respecting you. Of course that’s true, but it’s more elegant, IMO, to infer the sentiment without actually saying it. if you see what I mean.

So I would say something like: “I always pay my bills on time as I feel it shows respect for the tradesman undertaking the work - It’s not a lot of money but, having not been paid, I fear you do not value the work I have done for you.”

I would add that when I first started self-employment I went to a number of lessons at the local chamber of commerce, and one of the speakers there shared the dictum “invoice early, pay late”, and went on to emphasise the importance of cashflow to business. I held this dear and became an asshole payer, until someone did it to me.

My sentiments about monies owed to me are exactly the same as yours. It’s not the cash itself that’s important - I guess that’s the reason I’m kinda lazy about chasing up my debtors. But I always remember non-payers, often bitterly. On the other hand, when I’m short of cash myself, I find it easy to forget how that feels. So when I do chase people up this month I will be employing a more humorous letter in the first instance.

I do wish your site had a “printable” or “article-only” view, however, as I would like to print out this post and keep it for reference. Any criticisms of your letter are surely extremely minor niggles.

Stroller

February 3 2009 @ 05:55am #

Also: check out the comments at Reddit about your letter.

I think this is really insightful:
What I like most is it fosters an environment where they can feel
good by doing right to you! An opportunity for them to sorta
self-serve their own does of good or bad.

The letter confronts the reader, and challenges them to NOT be an
asshole.

Andy Clarke

February 3 2009 @ 06:05am #

Hi. I’m away from my studio this week at a client site in Egypt, so please forgive the pecked iPhone reply. Thanks for all your feedback, I’m glad this might help.

Glenn

February 3 2009 @ 07:46am #

This is great and I passed it on to family that has had collections problems in the past.

I’m not a lawyer, but I would refrain from threatening to shutdown or pull back any work unless your contract states that you have the right on default of payment. Letting a service expire and refusing to fix something seems like fair game though.

joe

February 3 2009 @ 08:00am #

Just use a business model where you don’t run into this situation. If your work is renowned, your customers will be begging to work with you and really should pay you up front for your talent.

If a customer doesn’t pay, they aren’t a customer. Business is business.

Andy Clarke

February 3 2009 @ 08:14am #

@ Joe: “If a customer doesn’t pay, they aren’t a customer. Business is business.” — That’s very true, and in the past I have stopped working for bad paying customers without payment in advance. But whether your work is renowned or not, customers rarely ‘beg’ to work with you.

All of my new customers are asked for 50% in advance, but occasionally an existing customer, who has previously been a ‘good’ payer will slip into bad payment habits and often for those ‘small amounts’, those fast turnaround jobs. That is just a fact of life of running a business for ten years as I have.

@ Stroller: Thanks for the Reddit link. I’ve not been linked on Reddit before (I don’t think) so I was a little worried about what I might find (if Digg comments are anything to go by), but I was surprised. Thanks again for your other comments too.

Stroller

February 3 2009 @ 08:21am #

I don’t submit the story - just found your post from there.

sathik

February 3 2009 @ 10:06am #

I strongly agree the excuses with respect.
That was wonderfully framed in simple english.

wow… gud luck

Don

February 3 2009 @ 10:19am #

It is important to include a clause in your contracts:
Payments are due within 7 days of receipt of the account. Interest at the rate of 2% per month will be assessed on any account overdue more than 15 days. Service will be suspended if payments are more than 15 days overdue and that prior to any such suspension, you will give sufficient notice so that the delinquency can be rectified.

Then, on the 10th day after issuing the account, write an email: “I am wondering whether you are now in a position to pay the account that was rendered on….... . I am hopeful of maintaining accounts and services of all my clients in good standing to protect them from the default remedies outlined in their contract. KIndly advice.

Then on the 14th day, send another message asking for the status of this since you have not heard from them regarding the delinquent account and the default trigger dates that are quickly approaching.

Keep it friendly! Usually they will email or call about the status of the account will prior to having to take action. Most delinquent accounts are simply delinquent due to accidents. With each email, send a copy of the original account.

Don

Chuck

February 3 2009 @ 10:21am #

The most effective collection I had was from before the days of email. It’s called “small claims court”. A guy owed me $800 for work performed for most of a year. He had repeated promised to send it to me. Finally, I went to where he worked (he knew I was coming, but conveniently wasn’t there). I sat down at his desk and pulled out his own stationery and handwrote a note about how, if I didn’t have the money by the end of the day, I’d be filing a claim again him. Of course, I heard nothing. Incredibly enough, I got a phone call two hours before court session telling me that he had the cash for me and “could we just skip this whole court thing?”. And, yes…I continued to work for him after that…and he paid before I left every time. But I hated to have had to take it that far.

Andrew Spittle

February 3 2009 @ 10:33am #

Great letter. I’ve always found that sometimes being bluntly honest brings out the best traits in others. Sometimes you actually get a better idea of who that person is.

Donnie Berkholz

February 3 2009 @ 10:34am #

Great use of reciprocity. As you can see, it worked wonderfully. To understand why, and other techniques you could try for this or anything else, check out Robert Cialdini’s amazing book “Influence: The Psychology of Persuasion.”

Andy Clarke

February 3 2009 @ 10:40am #

@ Don: “…It is important to include a clause in your contracts…” — That’s true and good advice, but I can’t help myself in seeing the best in people most of the time. People sometimes do fuck up, go on holiday, crash motorcycles — I know I do. I also find it too time consuming to keep on top of chasing people. But you’re absolutely right, it’s really important to keep on top of getting paid, especially now.

@ Chuck: “The most effective collection I had was from before the days of email. It’s called “small claims court”” — And that’s always an option if things really go tits up. Personally I wouldn’t have the stones to do what you did. I’m glad it worked out for you, but that’s not an approach I would ever want to take.

Sean Murphy

February 3 2009 @ 12:00pm #

A calm call asking them when you can expect payment can work wonders. See also Len Sklar’s “The Check is NOT in the Mail” for how to manage collection starting with your credit policy.

http://www.amazon.com/Check-Not-Mail-Without-Customers/dp/0962483354/

Nick Toye

February 3 2009 @ 08:56pm #

Andy, I had a client who I reckon got the hump because I had reminded them 4 days after the 30 days were up that the invoice was overdue.

I got the response that, “well some of our clients don’t pay us for 90 days”,

Sorry about that, but I’m a small business owner, I can’t afford to wait 90 days for invoices to be settled. Plus it’s not really my problem taking on someone else’s inability to debt collect.

Great email by the way, have to remember that one.

Rox

February 6 2009 @ 06:43am #

Very well-written email - as a freelance copywriter I have had to send out similar emails once or twice… not fun.

One client I had often used to pay late, but we had a good system going. I would send him a friendly email asking if he needed any further work, and when he took the bait, I sneakily dangled the unpaid invoice in as motivation. Worked like a charm!

Now, clients are mostly good about payment, bar one very tricky experience I recently had. The project has constant issues, my input was ignored and my copy was butchered, and when my work was finally done, my invoice was ignored.

Eventually, after I wrote something similar to your email, client responded saying that he had expected more (it would have helped it he had read the proposal that he approved, lol) and was not happy.

At that point the whole thing was getting too much, so being the nice sucker that I am, I told him that he didn’t have to pay.

Moral of the story: 99.999% of the time, people respond well to an honest approach that appeals to their better natures, but if they don’t have a better natures, then it doesn’t help what you say - they had no intention of paying anyway.

William White

February 9 2009 @ 09:02am #

My favorite is. Pssst! Ya got any money? Me either. Please. This always works for me.

Samuel Richardson

February 11 2009 @ 09:40am #

Fantastic, I just modified this a little bit and sent it off to my client. I got an email back about 30 seconds ago saying that they’re going to pay it _today_

Thanks for this mate!

Commenting is not available in this channel entry.

The most effective debt collecting email I ever wrote

Leave your comment

Pete

Andy Clarke

Pete

Andy Clarke

Martin

Glenn

joe

Andy Clarke

Don

Chuck

Andy Clarke

William White

Samuel Richardson

Hardboiled Web Design by Andy Clarke