The universal truth in negotiations is that everything you want in life is owned or controlled by someone else, so we are negotiating all the time. The other maxim is that most North Americans can’t stand haggling over terms. Examining these two statements, one can immediately see a disconnect. Unless you set out to learn how to negotiate, you are going to get your clock cleaned regularly by your opponent.
In the process of collecting your accounts receivable, many factors will come into play. Time is a huge factor while obtaining full payment is another desired outcome. Missed opportunity costs can impact both sides as well as negative credit ratings. While our list is not exhaustive; it is meant to demonstrate the issues at stake for both parties.
Negotiations in business and accounts receivable start with a potential customer applying for credit terms with your company. Assuming you approve this customer, they will have agreed to your Terms and Conditions in writing by signing your credit application. The credit application, along with its Terms and Conditions, is a powerful document. 99% of your customers have full intention of repaying their debt to you, so their signature on your credit application gives you much power. All parties in this relationship want to see it work for everyone’s mutual satisfaction.
Anyone who has been in business or credit-granting for longer than 30 days knows that all too often, there are customers that want to keep their end of that deal but don’t. The invoice becomes due, but your customer hasn’t paid as agreed. It is at this critical juncture where you hope your staff’s negotiation skills are honed and ready.
Unfortunately, as mentioned in the first paragraph, most North Americans detest negotiating and would pay the full retail price of goods or services, whereas the rest of the world sets their prices by bargaining. Your credit and collection employees are tasked with the effective management of your company’s cash flow, so it makes good sense to give them (along with your sales team) the training required to make them effective.
The purpose of this blog isn’t to teach negotiations, but rather open one’s eyes to the missed opportunities within your organization that occurs daily and to recognize the immediate return on training investment for you and your team. One of the best resources we have found on this fascinating subject is a book by a Chris Voss entitled “Never Split the Difference.” Mr. Voss is a former FBI lead hostage negotiator and now the owner of The Black Swan Group.
We’ve all had customers who have gone dark and stopped communicating. One of Voss’ tactics is to send the following email:
Subject line: Have you given up trying to pay?
Body of email: your name contact details
Like this example below (fictional):
That’s it. Short and sweet. Our staff uses it to great effect. We highly recommend this resource as it offers a multitude of practical negotiation strategies for any business or personal transaction.
Good luck, and please feel free to share on social media or better yet, share your best negotiation stories or feedback on our blog using the ‘Leave a Comment” option found below.