What I Learned About Credit Control From: How To Win Friends & Influence People (Part 2)

6 min read

Amazing credit control advice can be garnered from a great deal of sources. In this post I’ve taken a look at the world-famous self-help book How to Win Friends and Influence People by Dale Carnegie and how it’s timeless advice can be leveraged by finance teams to achieve an amazing credit control function.

Make sure you read Part 1 before continuing below to get the most out of this post.

Twelve Ways to Win People Debtors to Your Way of Thinking

In this section Carnegie continues to build on his established techniques and principles with a spin towards convincing others of your position.

The first of the principles in this section is something most people (especially those who are owed overdue payment) might find hard to follow - the only way to get the best of an argument is to avoid it. Really, this is just a continuation of Carnegie’s first fundamental technique in handling people, but one worth restating. You should never approach a debtor with overdue invoices with feelings of anger or frustration. These will just get the better of you, because all the threatening, pressuring, or quoting-the-law in the world, even if it does get you paid, is ultimately a shot in the foot. You just set yourself up to face the same battle again next time. Avoid the argument, instead approach them in a friendly way. They’ll be much more receptive to your position, not only getting you paid but also making the whole process quicker and easier next time. As Carnegie says:

“A drop of honey can catch more flies than a gallon of gall.”

When you do get a conversation going with a debtor whose payment is overdue, let them do a great deal of the talking. Letting them rationalise their position on their own is much more effective than you telling them what it is. We’ve said it before, not even your crappiest PITA customer’s self-awareness is so low that they don’t know they’re a PITA. If you try and make this painfully clear to them, you violate one of Carnegie’s most sacred principles. Instead, talk less. Get them talking by asking something like “We’re really excited to continue doing business with you, but I’m noticing we aren’t quite getting there with this invoice being paid on time. How can we work together to help?” This gently puts them in the position of being forced to justify the unjustifiable - you’ve done everything right, you’ve been polite and understanding, and they still haven’t paid you on time. There’s no justification for this and they know it. Watch them spring to action and pick up the slack in shame. Had you come at them aggressively, they’d simply go on the defensive and the battle would wage on.

While this is going on, always remember to try honestly to see things from their point of view, and be sympathetic with their ideas and desires. This individual who is responsible for paying you is likely not deciding to pay you late just to irritate you. There could be any number of factors at play that is hindering them from doing so. The last thing they want is yet another force opposing them, and you hounding them for payment is providing exactly that. Step in their shoes and try to learn what’s holding them back, and sincerely try to help them where you can. It can be easy to forget that you and your customers share mutual goals, and an “us vs. them” mentality will always work against you both.

Be a Leader: How to Change People Debtors Without Giving Offense or Arousing Resentment

In this final section of the book (ignoring the now-removed sections on business letters and marriage), Carnegie continues to refine earlier techniques and principles into those which are specifically helpful to leaders in the workplace. Fortunately for us, these can be equally well-adapted for you to use with your debtors.

Thus far Carnegie has made strong note of steering clear of negativity and using honest and sincere positivity to achieve mutually agreeable ends. This is hugely powerful, and often the biggest barrier to this is one’s ego, but when it comes down to it even Carnegie asserts there is a time and place for negativity. You just need some finesse in executing it. Two principles from this section are apt - call attention to people’s mistakes indirectly, and make sure you talk about your own mistakes before criticising the other person.

When it comes to getting results from a debtor and getting paid, if you can’t subtly direct them to the conclusion they need to reach, make sure you ask questions instead of giving direct orders. Telling them they need to make payment by a specific date robs them of their own initiative and inherently puts you in a position of power over them - something they’ll resent, making mutually agreeable results that little bit harder to reach. Framing it as a question is easy (e.g. “Could you make payment by the 12th?” or “When would you be able to make payment on this?”) and sands down the sharp edges of the power dynamic, putting you and your debtor on an equal footing. This makes them more favourable to achieve mutually agreeable results, as their payment is now their initiative rather than your demand.

Carnegie comes towards the end of this section with two appropriate and notable principles - praise every improvement, and give the other person a fine reputation to live up to. Harkening back to his fundamental techniques, Carnegie reminds us that when you do see improvement in your debtors payment habits from leveraging the above principles, you should praise them for it so they are inclined to continue improving. Over time, this continuing praise builds a higher standard for them to live up to - one of a Superstar customer. Any debtor of yours that is built up to Superstar status is unlikely to want to fall back down into the PITA depths. Once again, the perfect medium for achieving this is sending your customers ‘Thanks for Paying’ emails every time they make payment, whether on time or not.

In its life so far, How to Win Friends and Influence People has sold over 30 million copies worldwide, ranking on more than one list of the most influential books. It’s not hard to see why. Without a degree in the field, Carnegie has really hit the nail on the head of effectively producing the layman’s guide to the human psyche. Just as countless millions have so far, today’s finance teams can leverage Carnegie’s insight to not only overhaul their credit control function, but better their customer relationships, and reap the cash flow reward from both.

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