The British Tax Office has a long list of late payers and they found the traditional approach of letters threatening interest charges, late payment fees and legal action were just not working.
They adopted
a new approach, pointing out the connection between taxes and the services that
benefit all citizens, and the fact that 9 out of 10 taxpayers actually pay on
time. Sounds basic enough but the improvement in recovering overdue debts was
very impressive. A clearance rate of only 57% in one portfolio in 2008,
translated to 86% in a similar portfolio in 2009 after the new letters were
introduced.
The dramatic
improvement was put down to a psychological phenomenon that people’s behaviour
is largely shaped by what those around them are doing. Conforming to group
behaviour is a strong incentive. Might be worth a try next time a customer
defaults.
