Forty One.

Chasing payments in a pandemic.

This week Frankie Tortora and Steve Folland have a chat in response to a question from accountant Caroline Boardman. She says:

“How should we chase payments in this climate? When you know times are tough for people but you need to get paid too, what’s the best way to approach credit control?

As an accountant, I am in the position of knowing more than most about my clients’ finances, so it is tricky to chase a late payment when I know they really don’t have the cash in the bank! Should we just be leaving it at the moment and chase after lockdown? Should we just be doing what we usually do? Or is the best thing to do to offer payment plans? Help!”

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This episode is supported by Nutmeg.

Nutmeg offers customers a high-quality investment service at a reduced cost, whether they have £500 or £5 million to invest. Nutmeg now manages over £2bn on behalf of over 80,000 customers, making Nutmeg one of the UK’s fastest growing wealth managers and the fifth largest wealth manager in the UK by customer numbers (Source: PAM Asset Management, January 2019).

[Risk warning: Capital at risk. JISA rules apply]

Take note dear listener! We might swear a bit. This one’s for the parents. To be enjoyed at your desk or once the kiddos are in bed.

Here’s what was said in this episode:

Comments on the previous episode:

[00:01:41] – Frankie
Hello, you’re listening to the Doing It for the Kids podcast, where we swear a bit too much and talk a bit too fast about freelance life with kids in the mix. I’m Frankie and this is Steve.

[00:01:51] – Steve
Hello, yes! Each week we take a question for the Doing It For the Kids community. Do our best to answer it, but of course, we start each episode by looking back at last week’s episode and taking your comments, your thoughts on board as well. Last week’s episode was…

[00:02:04] – Frankie
Charlene talking about having seven minutes a day rather than 6 hours to get anything done.

[00:02:09] – Steve
Thank you so much for your comments.

[00:02:12] – Frankie
In that episode I mentioned Rebecca Lismer, who does like… what did I call it? Micro tasking? I don’t even know if that’s a thing, but like breaking her to do list down into really small chunks that she can pick up as and when.

[00:02:24] – Steve
It was a good phrase.

[00:02:25] – Frankie
Oh, thanks. Yes, so Rebecca commented, having listened to the episode.

And Rebecca said,

“The micro task life chose me. And if there isn’t a book about microtasking, I think I might just have to write one. I mean, it might take three years in five minute chunks, but you know… currently homeschooling and running a handmade business and keeping everyone alive means my life is microtasked to the hilt!

My main advice is keep it achievable. Big tasks broken down into 5, 10, 15, 20 minutes chunks. Have tasks that you can do when the kids are awake. Have tasks that you can do when they’re asleep. My mother hustling highlights over on Instagram has a load of my tactics. And I have a home school highlight, too, if you’ve got small ones.

Mine are four and 18 months, just remember that achieving anything is a win, even if it’s just five minutes of crochet or dictating an email to your Notes apps to type up later. You got this.”

[00:03:12] – Steve
Oh, what a lovely comment. Thank you.

Rachel Cockburn got in touch. Rachel’s comment, by the way, is linked to your son now being able to open the fridge.

[00:03:20] – Frankie

[00:03:23] – Steve
Rachel says,

“I’ve already learned the hard way that nothing is safe. I got up at 6:40am the other day…”

Alright, check you out having a lie in!

“I got up at 6:40am the other day to find my four-year-old had successfully taken the box of matches from the top of the window blind and laid them out on the floor!”

Our answer to this week's question:

[00:06:17] – Frankie
This week’s question comes from Caroline Boardman. Hello, Caroline! She is an accountant and does some business consultancy,

Caroline says,

“How should we chase payments in this climate when, you know, times are tough for people, but you need to get paid too? What’s the best way to approach credit control?

As an accountant, I’m in the position of knowing more than most about my clients finances, so it’s tricky to chase a late payment when I know they really don’t have the cash in the bank. Should we just be leaving it at the moment and chase them after lockdown? Should we just be doing what we usually do? Or is the best thing to offer payment plans? Help!”

[00:06:57] – Steve

[00:06:58] – Frankie
I know, right? From an accountant as well, which, like, if she doesn’t know…

[00:07:03.270] – Steve
Yeah, such a good point. Who are we to say?

Do you know, one of my favourite quotes from a very early episode of the Being Freelance podcast that I was doing was a guy called Fraser Davis and his quote was, “Nice guys get paid last.”

[00:07:19] – Frankie
True, but brutal.

[00:07:20] – Steve
He wasn’t saying that we should be arseholes, but what his point was — and it was a good point — was that basically the person who shouts the loudest is going to get paid first in a long line of unpaid invoices. And so if you’re the person who goes, “oh, until next Friday, yeah, that’s absolutely fine. Okay, bye then”. You’re the nice person who gets paid last.

[00:07:39] – Frankie
Or if you don’t chase them at all, if you just leave it.

[00:07:41] – Steve
Yeah. Doesn’t mean that we can’t be kind as well, though.

[00:07:45] – Frankie
But persistent as fuck.

[00:07:49] – Steve
If anything, Caroline, I feel sorry for you because, like you say, you know more about them than you normally would. I suppose you can’t put that genie back in a bottle, though, can you? I was going to say maybe you need to pretend you don’t know that information. What do you think? That feels…

[00:08:04] – Frankie
In like, normal times, one would talk about the ways that you can separate yourself from your client when it comes to chasing for money, right, because no one wants to be that person that’s hassling you for cash. And I would argue that maybe in the current times there is even more need for that. There are ways and means of doing that. One is having something like Freeagent or Xero, whatever, an accounting software that you can send just automated reminders to people. So it doesn’t come from you, it just comes from the machine.

[00:08:36] – Steve
Or you can make up a person!

[00:08:38] – Frankie
Yes, Janet Accounting at Caroline Boardman, yeah, you make like your mate Greg your finance team. Except Greg doesn’t exist, he’s just an email address. Greg@…

[00:08:47] – Steve
Those reminder emails, you can set those to go out before the due date as well, right?

[00:08:54] – Frankie
Oh yeah, yeah.

[00:08:55] – Steve
So it’s like, “hey, don’t forget that this is coming up!”

[00:08:57] – Frankie
“You’ve got 14 days” or “here’s a reminder about this invoice that’s due”. That’s all it has to say. But it hasn’t come from you. It is an automated thing.

[00:09:05] – Steve
The thing is, is that when you are more personal about it — the guilt trip is heavier.

[00:09:11] – Frankie
Yeah. But I think having something like that, that just ticks away. So it’s like… 21 days to go, 14 days to go, seven days to go… And particularly at the moment, because if these people are anything like me, there is a hell of a lot going on in my life outside of my work, let alone outside of any money that I owe people. So I usually would pride myself on paying other freelancers as quickly as possible, but at the moment I’m not checking my email as much, I’m just not on top of it as much. Just having that regular check in is more important than ever at the moment because it means they might just… it might be that final reminder that actually gets them to do it.

[00:09:48] – Steve
Obviously, this doesn’t work far as chasing up invoices which have already gone out. But what if in general, if in our terms we had something where we offer discounts?

[00:10:01] – Frankie
Oh, for paying on time?

[00:10:01] – Steve
No, if you pay early, that might encourage people to actually…

[00:10:06] – Frankie
Are we talking about paying the amount due early, then you’ll get a discount?

[00:10:12] – Steve
Yeah, like a reward.

[00:10:14] – Frankie

[00:10:15] – Steve
Now you see, the payment plan thing is interesting because maybe you could make it sound like it’s across the board… “to help clients during this coronavirus thing, you’re offering payment plans, blah, blah, blah. If you would like to take it up on it, get in touch”.

[00:10:31] – Frankie
Oh, totally. I wouldn’t make it specific to them as an individual. Totally generic, totally. Like, this is going out to everybody in light of what’s happening, I am offering X, Y and Z options. Or pay me today and you’ll get a discount of 15%!

[00:10:47] – Steve
If you want to help them in that way, if you want to be kind — and if you can afford to do that as well — then to a certain extent, getting the payment slower is better than not getting it at all. Or better getting it in a trickle rather than simply waiting for the one lump sum at the end. I don’t know legal type things here, but personally I feel like I would want some kind of assurances in writing — “this is the payment plan”.

[00:11:11] – Frankie
Yeah, a contract of sorts, yeah.

[00:11:13] – Steve
So it’s almost like they are acknowledging that, yes — I owe this amount of money and I am going to pay it over this amount of time.

[00:11:19] – Frankie
Commit to pay x. Yeah.

[00:11:22] – Steve
One thing I was going to suggest in general is to use something like Go Cardless.

[00:11:27] – Frankie
I’ve heard of it, but I’ve never used it.

[00:11:29] – Steve
So Go Cardless is a really easy way for people like us to set up direct debits.

[00:11:34] – Frankie

[00:11:35] – Steve
So for example, there’s a few people I do this with. I do this with my VA, I use it with my accountant and with a copywriter who I work with for being freelance. One of those is a fixed fee — the accountancy, I know what that’s going to be anyway. But the VA thing, that can fluctuate depending on how much I need her. So the payment can change and she will send me an invoice for me to save. But it’s basically like, you don’t need to do anything about this invoice. Payment will be taken on this date.

[00:12:02] – Frankie
Yeah, “and this is how much it will be”.

[00:12:03] – Steve
I’ll be honest, I bloody love it because actually, paying people is a bit of an arse. Having to log in and even using some of the cool apps like Starling or whatever, where it’s super quick to pay people. It’s still something I have to remember to do. So I was very happy to set up Go Cardless.

[00:12:23] – Frankie
Sounds like she should do that generally.

[00:12:25] – Steve
It just takes it away.

[00:12:27] – Frankie
As you say, like half the barrier to paying somebody is the faff of the actual task.

[00:12:31] – Steve
If you find there’s some kind of friction — and I don’t know why anybody wouldn’t want to sign up to Go Cardless — but maybe that’s where you can say that for people who sign up to Go Cardless, I offer a percent discount because actually it will kill your admin and chasing time anyway, so it’s probably worth that discount! Yeah, I bloody love it.

[00:12:49] – Frankie
Interesting. I feel like we should talk about the potential awkwardness and guilt and I guess the feelings and emotions around chasing payments at the moment. And particularly when, you know, like she says, you know what kind of situation they’re in. That’s heavy. I would find that really difficult.

So I guess, maybe, as well as in a practical sense it’s worth removing yourself from that process, maybe psychologically you need to be like — we’re all businesses. I don’t know, you need to shift how you think about it slightly? But at the same time, I’m full of rage at the situation and empathy for people who are genuinely being fucked over by what’s going on. It’s finding a balance between making sure your business doesn’t suffer, while also being sympathetic to people whose businesses are struggling.

How do you manage the language around that? And I don’t know, I have no solutions.

If you’ve put any of these things in place, like you have automated stuff to remove yourself, if you’ve offered any kind of discount, if you’ve offered any kind of payment plan, you’ve done your bit to make life easier for them without compromising your situation. I guess it’s about what level you’re comfortable to go to, to be accommodating without it impacting on your cash flow.

[00:14:17] – Steve
Those sort of things work more when you’re really dealing person-to-person rather than with bigger businesses. I mean, don’t get me wrong. It can be an absolute arse getting money out of bigger businesses more often than single persons. But in this situation, it’s harder, isn’t it, to distance yourself?.

[00:14:38] – Frankie
The usual advice, like… if somebody came into the community and was like, “I haven’t been paid by this client, blah, blah, blah”, the usual advice that people would give is, like — 30 day terms, et cetera, et cetera. You’re legally entitled to charge this amount of interest. You can send them this letter, you can take them to small claims… all that stuff. Obviously those escalate over time. But I guess what’s different right now is like, you don’t want to go hard and fast into any of that kind of stuff. While you’re entitled to do all of those things if somebody hasn’t paid you for two months, three months…

Again, it’s like finding a balance between people taking the piss and using this situation to just get away with not paying you, versus you feeling comfortable with and morally comfortable about how you chase that and how you pursue it. Yeah, without getting walked over. The way you communicate and the language that you use and the options that you give people… Essentially, you want to make it easy for them to come to you and tell you if there’s a problem. Because I can imagine it would be very easy if I was in real financial issues to just ignore, ignore, ignore, ignore.

[00:15:52] – Frankie
Particularly, actually with an automated email like you touched on earlier. Every time that email comes in chasing me for it, it would make me more stressed and more anxious. What I’m trying to say is — if you word those bits of communication in again, like a human way, and you give people options. Like, you’re giving them the options rather than them feeling they have to come to you and go, “I’m a bit screwed — could I do x, y and z”. Instead, you’ve given them an in.

[00:16:19] – Steve
What kind of options?

[00:16:20] – Frankie
So, like, if you’ve got a payment plan or a discount, whatever it is, like if you’ve laid out the things that you’re currently offering under COVID-19 scenario, it gives them a means to start a conversation with you about their situation rather than them feeling ashamed to have to admit that they’re in a difficult situation. It might make it easier for them rather than them, like, digging a hole and ignoring you.

[00:16:46] – Steve
When people do pay, send them an email saying thanks.

[00:16:52] – Frankie
I’m sure she does that anyway!

[00:16:54] – Steve
That makes them feel good about it. And so when it comes to paying next time, hopefully they’ll remember that feeling and want to pay a bit sooner.

That was a good question, I liked that.

[00:17:04] – Frankie
Wasn’t it?

[00:17:05] – Steve
It feels like a mental workout.

[00:17:08] – Frankie
I’m worried we haven’t done enough justice in terms of the like… people are really quite fucked. I hope we have.

[00:17:14] – Steve
If you are listening to this and you’re going through something similar, you’ve been through something similar, then of course, as ever, we would love your comments. It is episode 41. You can search for that in the Facebook group or #DIFTKpodcast on Instagram and Twitter.

What would your advice be?

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