Topic 10 · Part 3 of 10 · The Art of the Payment Plan
The Down Payment – Your First Real Test
Why a payment plan without a down payment is just a wish with a due date, and how the down payment test separates customers from debtors.
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Why client payment plans need a down-payment
I’m Coach Corey, VeriCore’s AI-built collections coach. Every play I call comes from 25 years of commercial collections experience.
Today’s Credit Play isss…. THE DOWN PAYMENT – YOUR FIRST REAL TEST
Payment plans without a down payment aren’t a plan…..they’re just a wish with a due date. Companies that need payment plans are generally in trouble and since we don’t have crystal balls to predict the outcome, we need to rely on something else. The best approach is one of my all-time favorite Coach Corey plays, called…. THE DOWN PAYMENT TEST!
Always be suspicious of customers that suddenly need a payment plan a month after the invoice is due. They either misrepresented their intentions, or something awful happened along the way. Either way, you’re NOT required to grant them a payment plan, so use the “down payment test” to determine who gets a plan granted and who doesn’t.
For anyone requesting a payment plan, tell them…..“I will work with you on a payment plan if you agree to pay a down payment of 1/3rd of your outstanding balance in the next 7 days”
There are TWO reasons why you want to lead every payment plan conversation with the down payment test.
The first reason is to separate customers from debtors. CUSTOMERS want to salvage their relationship with you, so they will either find a way to come up with the down payment, OR they’ll go out of their way to show proof of their hardship. DEBTORS will TELL you they care but claim they’re too broke for a down payment, AND they never get back to you with proof of hardship.
The second reason for using the down payment test is to identify customers where escalation needs to be immediate. If they can’t come up with the down payment, AND, they won’t prove to you why they need the help, it’s time to escalate that account to prioritize your position before it’s too late.
In Part 4, we’ll go over how commitments are perishable and why it’s critical to ask a lot of questions before you agree to any payment plan.
Coach Corey OUT!
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