The festive season is a double-edged sword for businesses. December is often characterised by a rush of sales or a frantic push to complete projects. But January? January is when the bill comes due.

We call it the "January Hangover." It’s that universal feeling where businesses and consumers alike tighten their belts, assess the damage done by holiday spending, and desperately try to manage cash flow until the next major pay cycle at a time when many businesses are now in a 'quiet period'. 

For Credit Controllers, Finance Directors, Heads of Collections and Business Owners, this creates a significant headache. Your own operational costs haven't paused, but your debtors seem to have gone into hibernation. Everyone has most likely paid their employees a little early or maybe even given some bonuses out, cashflow can be difficult. What you do now will determine your success when 'pay day' finally arrives.

The challenge is obvious: You need to get paid. But how do you chase debt effectively in a month when everyone is struggling, without looking unsympathetic or damaging long-term client relationships?

The answer lies in shifting gears from "chasing" to "ethical re-engagement." - Repeat dials and inappropriate letters WILL NOT HELP.

The Failure of the "Hardball" Approach in January - In other months, a sternly worded letter before action might be appropriate for a chronically late payers. In January, however, aggressive tactics most likely backfire. Many of these customers/businesses have paid OK in 2025.

When a debtor is already stressed about finances, aggression triggers defensiveness. They might bury their head in the sand, ignore your calls, or worse, prioritise paying suppliers who treat them with respect over those threatening them. After all they can't pay what they haven't got.

If you push too hard now, you might collect the cash, but you’ll lose the customer for February, possibly forever.

What Are "Ethical Collections"?

At Re-engage, we believe debt recovery isn't about brute force; it's about clear communication, subtle negotiation, psychology, and maintaining professional dignity. It's about understanding and finding the right solution.

Our TWO good friends - Affordability and sustainability are the key.

Ethical collections mean recognising that behind every overdue invoice is a person or business facing their own pressures. It doesn't mean being "soft" on debt—it means being smart about how you recover it.

Here is how to apply an ethical framework to your January ledger:

Put yourself in their shoes - Make sure you fully understand your customer, their previous payment habits, how was last year for them. What industry are they in? - The more prepared you are the better the likely outcome.

1. Empathy is a Strategic Tool. Acknowledge the elephant in the room. Starting a conversation with, "I know January is a tough month for cash flow for everyone right now..." changes the dynamic instantly. It moves the conversation from an adversarial confrontation to a shared business challenge.

2. Be prepared to help - Continue the conversation with 'How can we help you get back on your feet?' - They know they haven't paid it's the solution they want.

3. Proactive, Not Reactive, Communication. Don't wait until the invoice is 30 days overdue. A gentle, friendly reminder before the due date ("Just popping this to the top of your inbox before the weekend...") or a simple SMS/WhatsApp message is far more effective than an angry demand letter after the event

3. Flexibility is Better Than Nothing. If a client owes £5,000 and genuinely cannot pay it until February, demanding the full amount now is futile. Ethical collection means negotiating a realistic payment plan. Securing three instalments starting next week is better for your cash flow than zero pounds indefinitely.

4. Avoid the 'I'll pay it when I get paid offer' - For many customers/businesses it will be very difficult to pay the overdue and next due payments in one hit - so accepting those offers without some substance will make month end a bitter disappointment for ALL

When to Bring in the Experts?

Sometimes, the best way to preserve the client relationship is to remove yourself from the chasing process entirely.

It is very difficult for internal teams to switch hats from "friendly advisor" to "debt collector" without causing friction and they will be extremely busy managing the inbound activity from those customers that do want to engage.

This is where an outsourced partner like Re-engage becomes invaluable. As part of Towerhall Solutions, we specialise in bespoke re-engagement strategies that turns non-payment into solutions

We act as the professional, neutral third party. We have the time, the expertise, and the emotional distance to negotiate payments firmly but fairly, ensuring your ledger looks healthier by February 1st without you having to play the "bad guy."

Don't let the January hangover paralyze your business.

Contact the Re-engage team today to discuss how we can ethically recover your outstanding revenue.

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