If you've been around the block, you've probably encountered a difficult debtor. Knowing how to negotiate with them in the appropriate manner ensures the best possible outcome for your business.
Throughout the negotiation process it is important to be prepared, use common sense and tread cautiously. Here are three tips to successfully negotiate with a problem customer:
- research the debtor
- be patient
- set realistic goals.
Research the debtor
The most common reason behind a debtor initiating a payment plan is due to financial stress. Although this may not always be the case, it is important to conduct some sound research to avoid potential bad debt.
One way to highlight bad payers is by researching their payment history and identifying if other creditors that have been paid on time. If your debtor has a past of payment failures it's usually a sign that they are under financial strain.
Let the debtor come to you with the first offer. This means the customer realises that a payment plan is in order and will hopefully make a reasonable settlement offer for you to consider.
However, that's not to say you can't put an idea to the debtor allowing them to suggest an appropriate amount to be paid at regular intervals. This still makes the customer feel as though they are in control of their finances and will instigate payment to ensure you recoup the funds you are owed. Remember, losing your cool won't bring your money back and will most likely push the debtor further away.
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Set realistic goals
As a creditor, you have to understand that you may not always be paid all that you're entitled. This is the unfortunate reality and the nature of the business.
Setting realistic goals is beneficial as it gives you something to work towards and prevents the process being drawn out over a lengthy period. These goals could be in the form of a negotiation timeframe, the amount being repaid, or a repayment timeframe. It also allows you to outline what you're willing to accept and prepares you for the probable outcome.
As you are providing a customer with a product or service, you are entitled to be paid on time and in full. However, from time to time you will be faced with customers who pay late or don't pay at all. When these situations arise, it's important to proceed with caution to ensure your business achieves the best outcome possible.
Remember, it is better to be paid some money over an extended period of time than none at all.
If you still feel overwhelmed by the process Dun & Bradstreet can help with the debt collection process.