Why People Like to Owe You Money and How to fix it

A restaurant I used to visit has an inscription on the wall, “no credit today. Come tomorrow”

When I began offering web design services many years ago, the first set of clients I had were friends and relatives. They paid part of the fee with the promise to pay the balance once the job is completed. Up till today, some of them are yet to pay me in full for my service. Also, when I got into the film industry as a crew member, I also worked with producers who are fond of owing people that work with them.

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Unmanaged debt like this will kill any business or career. You can’t build a successful freelance career or business when customers and clients don’t pay up. So what do you do if you often attract customers who are fond of owing you? In this video, I’m going to share with you common reasons why people like to owe you and what you should do to fix it. Before we get to it be sure to subscribe to After School TV for more insightful videos like this.

How they perceive you

If you are offering any form of commercial service, people will treat your service from how they see you. If they see you as just another hustler trying to make ends meet, they will not treat you like a business. This is because they don’t see your business as something to be taken seriously. Some may even see it like they are doing you a favour by patronizing your business.

Do you know what’s interesting to note? You are responsible for how people perceive you and your business. If they see you as just another hustler, it’s because that is who you presented yourself to be; intentionally or unintentionally. If they see your service as nothing to be taken seriously, you gave them that impression. And if you create the impression that your survival depends on them patronizing you, people will often take advantage of you. And one of the ways they do this is to not pay the full cost of your service.

So what should you do in this case? Stop treating your business as some unimportant side thing you are trying to do to survive. If you are really serious with your business, it should be among the most important things in your life. Your business should be something you talk about enthusiastically and emphatically. You are not just trying to make some money, you are creating value and solving people’s problems. That’s something to be proud of. If people see that you take your business seriously, they will take you seriously. The same people that want to owe you for your service will go to another serious business and pay for the same service even at a higher price in full. So you have to firm up for your business. Keep watching to learn how to improve the perception people – including friends and relatives – have of your service.

Sole decision maker

One of the biggest challenges you will have to face as an entrepreneur or business owner is building an efficient structure upon which your business will function. You are the entrepreneur, the marketer, the sales representative, the customer representative, the accountant, the bookkeeper. This is the story of many business owners.

When you are the first and last contact of your business, it is easy for people to cajole you to offer unreasonable discounts or sell on credit. When you are the only decision maker in your business, you expose yourself to unnecessary expectations from prospects.

It is understandable that a lot of business owners may not be able to afford employees at the early stage of their business. Interestingly, the solution is very simple. Create imaginary management and partners. When someone insists on a discount or buying on credit, let them know that your manager or partner will not approve of it. Or that it is against the company policy. Create an imaginary layer of decision making that allows you to walk away from any negotiation without giving a final response. That way you can negotiate based on what’s best for your business.

Lack of structure

Another reason people are comfortable owing you is because your service lacks structure. Some service providers lack a pricing structure as well as a discount structure. They price based on who they are talking to. This gives room for unsupervised price compromise. The problem with this is that it creates a lack of professionalism in your business.

To fix this, create a policy for offering discounts and credit. For instance, have a policy to offer discount when a customer buys more than 4 items at a time, when it’s a return customer or during the festive season. Communicate this to prospects when they demand discount. But only offer a discount when it makes business sense and not out of pity or desperation.

Depending on the nature of your business, you can create a no-credit policy like the restaurant I mentioned at the beginning of this video – “No Credit Today; Come Tomorrow”. If you have to sell on credit, since you are taking a risk, treat the credit as a loan and sell at a higher price. And make sure the person is credit-worthy and that they sign a contract on when and how to pay you. A lot of businesses already do this. For example, if you are buying a car, house or any other item on credit, you don’t pay the same price as someone paying out rightly. You pay higher. This should be applied in your business.

I used this method when I was selling jewellery and accessories to bankers and corporate workers. Since this was a market that is used to buying on credit, I sold to them, sometimes at double the price to manage my risk. But these were creditworthy customers. However, note that every credit transaction comes with a risk. The person might lose their job or even die and not be able to pay back.

Here is a bonus tip:

Technology makes it easy to run a one-person business while creating the impression that you are a company. You can easily create a business website that communicates how you do business and share the link with prospects for more details. You can also create a business email for enquiries. Of course, they don’t have to know you are the one responding. You can create your imaginary customer representative named Siri to respond to the emails on behalf of the company. Make sure to keep the email conversation and reply professional. Use ‘we’ instead of ‘I’ to create an impression of a company.

This will create a professional impression of your business. And potential debtors will take you and your business seriously. When someone you can’t say ‘no’ to insists on credit or asks unreasonable expectations from you, ask them to send an email to the corporate email address. Then reply to them as Siri and tell them an emphatic ‘no it’s against company policy’. They will treat your business with respect. I hope this video helps. If yes, like and share it with someone. If you are yet to subscribe to After School TV, now is a good time to hit the subscribe button. Until next time, YOUR SUCCESS MATTERS!