DennisBeaverNovember 12, 2016 • By Dennis Beaver

 

If you run a business — physicians, dentists and lawyers included — and are upset at customers and clients who don’t pay their bills, Chicago-based Executive and Leadership Coach Beth Keno has an observation that you might not want to hear:

“The customer generally isn’t the problem. You are the problem. You may be creating a culture where no one really cares about the company being paid as long as employees get their paycheck. So, ask yourself, ‘What messages am I sending to our staff about the importance of being paid?’

“When you do not emphasize just how important collections are, employees are being trained to think that you really don’t care how old an account becomes or if it ever paid. This attitude is then picked up by customers who will think, ‘They may send me a statement, but no one is calling or bothering me, so they are letting it go.’ “

As we learned from Keno, some customers will virtually scream, “You’re going to have trouble getting me to pay,” and if you take them on, good luck!

“There are clues that, if paid attention to, will tell you not to take on this customer, and that’s why your initial interview is so important, why being a good listener is critical,” she observes, citing:

• If they complain about a prior vendor or relationship, you’ve got to find out why.

• Do they still have an outstanding balance?

• Did they have an expectation that was not met? Was it reasonable? This is especially important with lawyers. If you are the third lawyer they want to hire — because the others were incompetent — there will be a fourth.

• What do they expect from you and how did they work with their previous vendor?

We’ve all heard the old saying, “If the milk is free, nobody buys the cow.” In her seminars, Keno reveals what she calls “the big secret.”

“I often hear, ‘They are my biggest customer and they won’t give me anymore work if I ask to be paid.’ You just have to listen to how absurd that sounds because you are doing work for free.

“Many businesses — especially law firms in highly complex, lengthy cases — need to take out loans to cover the costs of working month after month for a client that’s not paying. Lawyers are also held hostage by clients who aren’t paying but promise to give the firm their next matter.

“The big secret that I reveal is that customers or clients don’t leave if they are not paying. They have no reason to. Your service is free!”

Keno recognizes that for many people, asking for money creates anxiety, feels embarrassing, and they just won’t. But she has an excellent method which can minimize that reluctance, and it’s by having a Stop Work Policy.

“Regardless of your line of work, you need a Stop Work Policy and everyone in your organization must be aware of it,” she underscores.

“Stated at the time of your initial interview with customer, and then, if you haven’t been paid, these words can work magic: ‘It’s not me, but as you recall, we have a company policy to stop all work when your account balance is past-due.’

“It’s a version of ‘Referring to Higher Authority,’ where the employee diverts any anger from the slow or no pay customer onto your accountants, owners, managers, husband or wife who will not let you continue working until the bill is brought current.”

Keno sees the expression, “When your ox gets gored,” as applying perfectly to being part of the collection process. “If a bonus or raise is conditioned on getting the company paid, self-interest will can work wonders for the bottom line.”

Acknowledging that, especially in smaller offices, most people don’t like doing collections, “So they find everything else to do before they make that call. Hire someone experienced for that role, in a part-time position, who comes in once a week and that’s all they do,” she recommends.

“You should start your collection process right away, so when an invoice hits 30 days, you ‘Dial and Smile.’ Often, you’ll hear, ‘Oh, I never got your bill. Sorry, send me another.’ By calling early, you find out promptly, not at 90 or 120 days, and this affords you the time to stop work, if needed, promptly.

“Your customers, clients and patients have a legal and moral duty to pay for your services. Never forget that,” Beth Keno concludes.


Dennis Beaver practices law in Bakersfield and enjoys hearing from his readers. Contact Dennis Beaver.



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