Could handwritten Post-it notes improve your collection times?

28/09/2016

HM Revenue & Customs (HMRC) is sticking handwritten Post-it notes on letters to tax avoiders in a bid to ‘nudge’ them into paying up. But could this unusual tactic help your business’s collection efforts too?

What is HMRC doing?

According to FT money, the taxman is attaching Post-it notes to letters to taxpayers who are caught up in avoidance schemes to encourage them to get in touch.

The handwritten notes follow similar variations of “Please give me a call, if you would like to discuss,” followed by a Christian name and a telephone number.

HMRC said: “We have drawn on research demonstrating the effectiveness of concise handwritten notes, on top of a full letter, to help our customers understand the options open to them.

“We always act firmly but fairly with customers involved in tax avoidance, and always suggest that they speak to us. But where money is owed that is needed for public services, it’s right that we chase it on behalf of the majority of taxpayers who pay their tax on time, every time.”

What’s the idea behind it?

The Post-it note tactic was first set out by the Behavioural Insight Team — nicknamed the “Nudge Unit” — established by former prime minister David Cameron in 2010.

In 2012 it produced a report that drew on a US study of the effectiveness of adding personally written Post-it notes.

The study tested the impact of Post-it notes and handwriting on people’s likelihood of completing a survey and found that not only did adding a Post-it note improve response rates, it also resulted in people returning the survey more promptly and with more detailed answers.

This suggests that when applied to business situations people are also more likely to respond to messages that indicate extra effort and a personal touch.

Will it work for your business?

From our experience the more personal and approachable your credit control efforts are the more likely your customers will pay on time. For this reason, the Post-it note tactic could very well make a difference when it comes to encouraging your customers to make payment.

For example, you could stick them to your invoices as a quirky way to make them stand out. If you invoice electronically, a Post-it note could even be worked into the template design.

Alternatively, it may be more productive to use them at a later, more criticial stage, such as in the event an invoice has exceeded terms and your calls and emails are going unanswered.

In this instance you may want to send a letter explaining that the payment is overdue and they are now being charged interest on the debt under the Late Payment of Commercial Debts (Interest) Act 1998, which presents another opportunity to attach a Post-it. Even something as simple as “Please call me to discuss” could be the nudge required to improve your collections times.

Ultimately you’ll want to test different times to see if you notice any difference in success. But it’s important not to implement this tactic in expense of other, more effective ones, like making a quick courtesy call to check receipt of the invoice and confirm payment times.

If there’s one thing HMRC’s thinking demonstrates though, it’s that there is a science to credit control. Psychology is just one element to an effective department.

What do you think? Would this work for your business? Or do you think it’s simply a waste of time? Please share your views in the comments below.