How to Negotiate With Debtors

Negotiating with customers who have defaulted on payments is never an easy business, but there are things you can do to make it as straightforward as possible. You must follow all guidelines and legislation when undertaking any debt collection activity, but if you also follow these tips, you will be more successful in achieving prompt payments without damaging relationships with your debtors.

Start with a phone call
A phone call to the debtor may be all it takes. It could be that the unpaid debt is a simple oversight or the result of a temporary problem that has since been resolved. If that is the case, a simple reminder should be enough. Speaking to the debtor directly will help you gauge whether this is the case, or whether you are likely to have to take further action to recover the debt.

Follow up in writing
If your invoices and reminder notices have been ignored and phone call does not do the trick, your next step should be to follow it up with a letter. This is your opportunity to make it clear that you are serious about getting your money. You should state the precise details of the debt and when you expect it to be honored. It is important that you also make clear to the debtor exactly what will happen if the debt is not paid.

Be polite
Intimidating the debtor is counterproductive and must be avoided. Instead you should display a polite and professional manner at all times. This is a doubly effective strategy; it is proven to increase the opportunities that your debt will be repaid and it also goes a long way to maintaining a good relationship with your customer.

Stay calm
It is imperative that you remain calm during your negotiations. This can be difficult as debt collection is a sensitive subject and can lead to frustration and heightened feelings on both sides. The calmer you can remain the easier it will be to focus on your goals and avoid irrevocably damaging your relationship with the debtor.

Keep it businesslike
It is likely that you will have started your negotiations in a friendly manner, in the hope that the debt could have been recouped without too much fuss. It is important not to become too friendly with the debtor however, as this will make it increasingly difficult when the negotiations become more serious. Remember, this is a business and you are perfectly within your rights to pursue the debt until it is paid. Never lose sight of this fact. Explain what will happen if the debt is not paid, and do not make idle threats or you will lose credibility and encourage the debtor to ignore you.

Be open and sympathetic
If the debtor is experiencing financial difficulties, rather than simply refusing to pay, it is a good idea to remain open to any reasonable offers they may make. Renegotiating the terms of the debt may not just help them out of a tricky situation. It may also the best way for you to recover some or all of your money.

Keep the debtor in the picture
Make sure that you always let the debtor know how and when you intend to proceed. Each new step represents an upping of the ante. Not only is it courteous and professional to give the debtor advice notice, it also gives them a final chance to settle the debt before you take further action. Always be clear about exactly what the next step is and when you will take it.

Get professional help
If all else fails, get help from a debt recovery agency. They are the experts and provide the best chance of getting your debt paid. Do not leave it too long; it is important to employ an agency long before you have to write the debt off as a business expense.

Source by Jon Lambert

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