In the world of credit, there are two main reasons for non-payment. Either the debt in question is subject to a dispute due to communication problem or your customer is a collection problem. A professional debt recovery firm must be adept at negotiating in either scenario. Disputes between organizations can range from simple pricing errors to significant issues such as inferior products, resulting in a loss of business. Successful dispute resolution enhances cash flow and gives your credit team an excellent morale booster.
What Are the Mechanics of the Dispute Resolution?
Simple disputes such as pricing errors are usually met with passive resistance, meaning your customer will likely not reach out to you but protest by not remitting payment. When your accounts receivable staff begin making their calls on day 45 and discover that your pricing was incorrect, they will update the pricing and resubmit the invoicing to the customer for payment. The problem is solved, but your customer managed to extend their payable to you for perhaps another 30 days. Don’t be afraid to ask for immediate payment.
Understanding Your Customer
Dispute resolution requires that you listen deeply to your customers and truly understand the impact on their business. We suggest paraphrasing the dispute to a customer in your own words to ensure you fully capture their issue. FBI hostage negotiator Chris Voss discusses the importance of active listening a lot in his blog
Customer: “The product you provided for our Christmas sale didn’t get shipped until December 27th, and arrived on December 30th. How can I sell seasonal inventory after the season is over?”
You: “If I understand correctly, the product we shipped was to arrive before Christmas to give you an opportunity to sell the goods as gifts during the holidays, correct?”
Sometimes disputes can get extremely complicated. Issues such as delivery times, quality control, and damages can make what was supposed to be a routine transaction into a major incident. When you are in receipt of such disputes, we recommend slowing down your communications and making each contact with your customer as simple as possible. Keep accurate, detailed records, and do not let your emotions interfere with a negotiation process. If you feel yourself getting irritated with your customers, move aside and bring somebody in fresh to keep the negotiations productive. For more information on negotiation techniques, we suggest checking out our negotiation blog.
Hiring a Third Party for Dispute Resolution
In many circumstances, your customer will be relieved you have engaged the services of a professional recovery firm, as it takes out the emotion, which helps speed up the negotiation process. Hiring a third-party for dispute resolution can also have the opposite effect; your customer was happy to prolong the dispute process as it was protecting their cash flow. A professional outside negotiator can test your clients’ dispute for validity and exert the correct amount of pressure to determine if the disagreement is real or if your customers are suffering from an existential cash flow problem.
The Bottom Line
The bottom line is that dispute resolution is a crucial part of the business process and should only be administered by individuals who enjoy problem-solving. People who feel the customer is always right should not be attempting to resolve disputes. Alternatively, disputes should be handled by individuals who are good listeners and who can articulate issues to both parties, so solutions can be found. Disputes typically occur when there is a customer communication problem or if there is a customer collection problem. When considering hiring a professional debt recovery firm to assist with a dispute, you must ensure that the agency adept at negotiating both situations.