6 Reasons Why People Pay

Most debts can be collected without resorting to threats. However, people generally choose to pay for one of six key reasons. Understanding these motivations can help you tailor your approach to suit each situation. Review the reasons below and consider how to leverage them effectively to ensure invoices are paid promptly.

1. Need

For businesses supplying essential goods or services—like electricity or steel for a manufacturing company—creditors providing these necessities are often prioritized for payment. If you do THIS, you can improve results.  

On the other hand, services like accounting, while important, don't usually fall into the "must-pay-first" category. Payments to accounting firms are likely to be a lower priority for clients struggling with overdue bills for essentials like electricity or phone services. In these cases, the "need" factor cannot be relied upon as a strong motivator.

2. Honesty, Appreciation, and Obligation

Believe it or not, many customers still pay because they feel it's the right thing to do. While societal norms may be shifting, this traditional motivator still holds sway for a significant portion of debtors.

3. Conscience

Some debtors pay on time because they feel a sense of guilt when they don't. Consistent, polite reminders are key to tapping into this motivation. From the outset of your relationship, communicate payment terms and follow up persistently but respectfully. By doing so, you become impossible to ignore. In other words, be persistent—but avoid crossing the line into annoyance.

4. Embarrassment

People dislike feeling embarrassed, making this an effective but subtle tool for collections. Discreetly applying social pressure can nudge clients to settle their accounts. For example, this true story demonstrates how subtle embarrassment can work effectively in collections.

5. The "How Do I Get Rid of You?" Factor

This is the most effective method for collecting overdue payments. Persistence—when paired with politeness and a non-confrontational tone—often compels debtors to settle their debts just to avoid further follow-up. The key is to:

• Remain professional and non-aggressive.

• Be relentlessly consistent.

• Keep communication polite at all times.

One principle to remember: always share good news verbally, and bad news in writing. This nuanced approach ensures persistence without alienating clients or jeopardizing future business.

6. Fear of Financial Loss

This should always be your last resort. Measures like threatening to cease supply, halt ongoing work, or pursue legal action can grab a debtor's attention but should only be employed when all other avenues have been exhausted. These actions can strain relationships and should be used sparingly and strategically.

By understanding these six motivations and applying them thoughtfully, you can improve your debt collection efforts while maintaining strong debtor relationships.