Collection Problem? No. Sales Problem by Mike O’Horo
“The sale isn’t complete until the last dollar is collected.” This wisdom is imparted to all new salespeople on Day One of their selling career. If you struggle to collect what you bill, you have a sales problem. The collection problem is merely a symptom, and a consequence, of the underlying sales problem. When you don’t get paid, you’ve donated your service. If you can’t collect the full amount, your client has taken a discount that you didn’t agree to. The collection problem is merely a symptom of the underlying sales problem... Why doesn’t a client pay your bill, in full, on time?
Only Two Reasons for Non-Payment There are only two reasons: • They can’t • They won’t If they’re in serious financial distress, there may not be a lot you can do about it. This article isn’t about “can’t.”
Won’t Pay The “won’t” condition is what collections are about. Why does a client with enough means decide not to pay your bill? There are countless explanations, but they all derive from the same root cause:
value isn’t your time; it’s the imputed economic value of the business outcome and impact you enable or deliver.
A Practical Example Your daughter is trying to get into an Ivy League school. She has the grades, but so do lots of other applicants. You learn that the difference between getting in and not is how extracurricular activities are presented. (I don’t know this to be an actual criterion; it’s just an illustration.) A consultant with a track record of getting a much higher acceptance rate for his Ivy League applicants will help you raise your daughter’s odds of getting in, for which he’ll charge $5,000. Right now, you’re thinking, “$5,000 is a lot of money. Is it worth it?” Is it worth $5,000? Well, compared to what? Compared to something fuzzy and abstract, i.e., “raising the odds of acceptance,” maybe not. That’s hard to evaluate. What if that same consultant were to elicit from you your reasons why it’s important to your daughter and you that she gain Ivy League admission. You might mention: • studies suggesting a 39% earnings differential (Ivy over others); • the name recognition that you believe moves Ivy resumes to the top of the hiring interview stack;
The client doesn’t perceive that he received enough value for the amount he’s being charged.
• networking and other connections that you believe will open doors and pave the way for access denied non-Ivies;
Many lawyers react to that statement defensively, dragging out detailed time sheets proving that they worked the number of hours billed. They’re missing the point entirely. The client rarely thinks that you’re inflating your hours. How much time you spent isn’t the issue. It’s what they got—or didn’t get—out of the time you spent.
• the realization of a goal your daughter has worked toward since middle school, etc.
Establish Value Up Front Arguing value after the fact is extremely difficult and rarely successful. You must establish value up front. The important 26
Attorney Journals San Diego | Volume 198, 2020
Selling Yourself on the Value This conversation gets you selling yourself on the many specific forms of value of Ivy admission and, therefore, the value of the consultant’s service. (We’re assuming for this example that you’ve satisfied yourself that the consultant can deliver.) This is known as defining the Cost of Doing Nothing. In this case, it’s the cost of not retaining the consultant.
