You might find it hard to believe a reason for non-payment I was once given was:
“The squirrels in the park have bitten through our computer cables, and our systems are down.”
This was true. The main cables ran below the grounds of Birmingham Cathedral in the centre of the city, and the squirrels had chewed through them. The company concerned asked us to fax a statement showing the overdue balance on the account against which they paid 95%, keeping 5% back in case of discrepancies. Their systems were back up and running within two weeks.
Some customers will give all sorts of excuses for delaying payments to you, and the key to overcoming reasons for non-payment is to ask the right questions. The same questions as others chasing payment asked slightly differently from others!
For instance, most telephone and after introductions say “It’s about your account for £13, 786.68 (or whatever amount) followed by:
“When can we expect payment?”
“Do you need any copies?”
“Do you have any queries?”
One question that asks all of these without mentioning any is:
“Is there any reason why it hasn’t been paid, please?”
I will now mention possible answers and give you my first responses in italics. How you continue the conversation will depend on Influencing Factors (Benefits) you can use to influence customers to pay sooner rather than later, this week instead of next week, this month instead of next month etc.
“We’re waiting for a large payment to come in, and then we can pay you.”
“This money you’re waiting for, has it been owed to you long?”
“We’ve got cash flow problems.”
“I can appreciate the difficulties that must be causing you. However, is it okay if I ask you some questions with a view to giving you the best possible arrangements we can?”
“Your invoice has been passed for authorisation.”
“Great, who is it with for authorisation, please?”
“We’ve got that down for payment at the end of the month.”
“Thank you, however, in accordance with the terms and conditions your company has signed accepting for the prices agreed, it was due for payment last week. Who do I need to speak with for payment to be made today, please?”
“I’ll look into it and get back to you with an answer.”
“Thank you, what time today will that be, please?”
Rules to Consider for Overcoming Reasons for Non-Payment
- Be Confident
- Know your facts – plan your call
- Ask the right questions
- Be Tactful
- Acknowledge their point of view – thank you, I appreciate etc
- Create a mood of cooperation – appear to agree in order to change
- Take Away Reasons Not to Pay
- Use influencing factors and be persistent
Negotiating with Difficult Customers
“Proper Preparation Prevents Poor Performance“
A good negotiator has many skills, but without a thorough knowledge of the issues and the facts in question, these skills could prove useless.
Before you enter any negotiation, you need to be clear about your main aims and objectives.
For instance, when Collecting Money from Difficult Customers, your main objective, ideally, is to:
- Close Confident you will be Paid
Your aims are:
- To Know Your Customers
- Use Influencing Factors
- Overcome Delaying Tactics
If, during the negotiation, you establish your customer is unable to pay the full amount, you will need to consider whether you want to keep the customer as a customer. Having considered your objective, you can decide whether you are prepared to compromise!
Some negotiations will involve multiple issues. You need to isolate these and assess the relative importance of each. For instance, your customer says they have other debts to pay and not enough money to pay everyone.
You need to prioritise and deal with trying to reach a compromise on getting some money rather than none.
“I fully appreciate your position (use name), and we’d like to give you the best possible arrangements we can; I just need to ask you some questions with a view to giving you the best possible arrangements.”
- How much can you pay right now please?
- How do you propose to pay the balance?
- How much do you owe other creditors?
- Who are your biggest creditors?
- What arrangements are you making to pay them?
- How much are you owed by customers?
- Who are your biggest customers?
- When do you expect to receive payment from them?
This is a variable to your original objective, which was to obtain full payment of the arrears. Your main objective now is to try and get paid something and reach an agreement on how the arrears are going to be brought up to date.
Should a negotiation break down and you fail to achieve your aims and objectives, you need to be clear at the outset what your best alternative will be. In some cases, you may decide it is best to take legal proceedings to recover what you can. In others, you might decide to take action under Insolvency Legislation. Alternatively, you might exercise your right to call in on securities you may have over the customer or write off the debt!
Negotiations can take place over the telephone, face to face or through letters and emails. Each will have advantages and disadvantages you need to consider.
The telephone can be quick and useful for resolving most single issues. Tonality can be strong, and be aware that silences can often prove powerful!
Letters and Emails make it easier for you to be orderly and reasoned, but they can give people time to think and avoid hasty decisions.
The purpose of a meeting with a difficult customer is to explore possibilities of getting paid and reach an agreement.
When conducting face to face negotiations, think about the best place for the negotiation and whether you will negotiate alone or as part of a team!
A great advantage is being able to see body language, and meetings allow a greater opportunity to explore and settle differences and disputes. Bargaining and reaching workable solutions tend to be easier face to face.
However, you choose to negotiate, and if you cannot reach an agreement, you need to decide what you are going to make happen next if you don’t get paid!?
Contact us with your questions.