When dealing with customers who have accrued substantial accounts or have established patterns of late payment, it’s essential to retain customer goodwill by developing an approach that takes your personality and your company’s strategic position into account. Here’s a step-by-step approach:
1. In order to get a settlement quickly, without being side-tracked, determine:
• Quantum: Arrive at an amount that is not disputed. Ask “Do you agree with the amount reflected as outstanding?” If any query exists, you must explore it in detail, you cannot move forward on any amount that is potentially disputed.
If some element is disputed, agree you will resolve that amount. But continue the process by asking: “On the portion that is NOT under dispute, can we explore how you intend to pay it?”
Do NOT allow the debtor to apply ‘off-set’ (they are not legally capable of holding back a non-disputed portion pending you resolving their queries).
• Period: Ask when the Debtor intends effecting payment (but do not accept such a period, just explore what timeframe they have in mind).
2. The approach taken is critical:
• Be firm yet polite in your communication
• Constantly and persistently follow up via telephone
• Get specific: Ask about the details—what, when, and how much. Clarify what remains unpaid and why. Obtain specifics on payment amounts, dates, and even check numbers.
3. Harness the power of Silence:
At strategic points in the discussion, be quiet and wait. The person who breaks the silence always ends up conceding.
Remember, with concessions:
• He who concedes first, concedes most
• He who concedes last, concedes most
• Wait for the ‘bottom-line’ concession
• When making a concession, state: ‘We concede … in order to get …
• Win 90% of concessions during last 5% of negotiation.
• Win-win: make a final dignity concession. It costs you very little, and allows the other party to leave with dignity. In this way, you retain customer goodwill.
4. Call their Bluff:
If the debtor claims they can get better interest elsewhere, respond assertively: “Please do; we don’t want to act as bankers.”
5. Always insist that the settlement plan be tabled in an Acknowledgement of Debt (AOD), appropriately signed and witnessed. Stipulate payment dates and amounts in the AOD, and make sure that the debtor has filled in their street address. An AOD is there to ensure that a later dispute on quantum is avoided.
Contact us if you need further information, or if you would like us to help you with negotiating settlements.