Sometimes the reason you’re not paid is not necessarily the result of your client’s mindset or your client’s inability to pay. Sometimes it is the result of your own mindset. Sometimes—in fact, most times—your clients are just following your lead.
If your clients are going to start paying you on time, they will have to experience a change in their mindset. But in order to change the mindset of your client, you have to change your own mindset first.
You have to set an expectation, and then you have to communicate that expectation to your clients. If you have not made it clear to them what your expectations are for payment, then you have given them the power to make this determination themselves. You’ve allowed them to decide when or if they will pay you and how much they will pay you.
Here’s a personal example about what happens when you don’t set the right expectations.
As president of my homeowner’s association, I came across a situation where the level of expectation for payment had not been set properly. I was in my second year as president and my second year helping collect annual dues.
The first invoice had been sent, and then 30 days later a reminder was sent. Fifteen days later I decided to make courtesy calls to the homeowners that had not yet paid. This one homeowner in particular said to me, “I don’t understand this call. Why are you calling me? I pay when I’m ready to pay and that has been fine in the past.” I couldn’t believe I heard this with my own ears. But that is indeed what she had been allowed to do for the last eight years.
The person previously handling the Treasurer position was not comfortable or knowledgeable about making phone calls to collect the annual dues. And they didn’t always think to send reminder statements. So the homeowners took the position that the Association apparently didn’t need their money and didn’t care when they were paid.
In previous years, the Association needed to do substantial maintenance work, but homeowners were always told there wasn’t enough money. So the Association borrowed the money. Not only did they borrow the money for maintenance work, but they also spent thousands of dollars on attorney fees turning the unpaid accounts over to a collection agency.
I bet you know where this story is going. Since we’ve started making collection calls, dues are being collected. In fact, the only dues not collected were those from previous years. Cash became available to do the much needed maintenance work and we have invested in a few extra value-added amenities. We’ve also established a reserve account. There is so much more you can do for your business when you are collecting 95-100% of your receivables.
Changing your mindset will be harder than changing your client’s mindset. But once you change your mindset, your clients will follow your lead.