7 Tips for Negotiating with Debtors
While having to deal with a customer who has defaulted on a payment may prove a tricky task
, there are specific ways to go about the business of negotiation and collecting from debtors. However, it is important to note that all
debt collection activities must be conducted in accordance with all applicable guidelines and legislation.
Use these tips for negotiating with debtors to produce a positive outcome in getting your debts paid in a timely manner and maintain customer relations.
Start with a phone call
Sometimes the quickest, easiest and cheapest way to negotiate with a debtor is with a simple phone call. This could be a simple reminder in case the bill has been overlooked. You will be able to gauge within a few minutes if the customer has any intention of paying the account.
Follow up with letters
The process of using follow up letters shouldn't be overlooked. If you have already sent copies of invoices and reminder notices to no avail, you will need to let the customer know you are serious about getting your money. When a phone call is ignored the next step is to write a letter stating the details of the outstanding amount and when you expect this to be paid. Demand letters should specify exactly how much is the owing and what the ramifications are for non-payment.
Be polite and professional
By keeping your tone polite and professional you are displaying a positive image. While this is a proven collection technique, it also assits in maintaining customer relations. Further, you must not harass or intimidate the debtor. Remember, you are more likely to be paid if the debtor is not angry or upset.
Remain calm at all times
If you feel that your negotiations are continuously resulting in false promises, it could be that you end up feeling frustrated and angry. Remaining calm in all your dealings with the debtor is a necessity. It will help to keep your objectives in sight and prevent repercussions down the track.
Firm and not too friendly
Initial dealings may be in a friendly, reminding manner but it is important to appear firm and not get too friendly. This is a business after all and if goods and services have been provided there should be no reason not to expect a customer to honour the debt. Clearly explain the ramifications of non-payment and follow through with these. Debtors can become accustomed to continuous false threats.
Be open to offers from the debtor and sympathetic to cases of financial hardships
It may be that the debtor is struggling to pay and want to make progress payments or perhaps they are waiting on money from their debtors. Be open to any offers they suggest as long as they seem reasonable and realistic. Sometimes less money is better than no money.
Give advanced notice at every step
Always give advance notice of the next step in your negotiations and attempts to recover the debt. If you feel you need to contact a collections agency to handle the recovery for you, let the customer know you will follow through by a certain date.
Summary
Negotiating with debtors will be an ongoing part of operating any business. By remaining calm and professional in all your dealings with your customers you will be showing them you are serious about recovering debts. Follow through with each step if there has been no response and use an agency long before the debt needs to be written off as an expense.
If all your negotiations fail, you can always refer the debts to debt collectors. Not only are they experts in
debt recovery and give you the greatest likelihood of success; they will also provide their services on a contingency basis.
7 Tips for Negotiating with Debtors
By: John Zukerman
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