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home | Negotiations | Developing a Negotiating Attitude

Developing a Negotiating "Attitude"

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A study at Vanderbilt University's Graduate School of Management revealed that agreeable and cooperative people fare poorly in negotiations. The study also demonstrated that the relative intelligence of the parties negotiating played only a small role in the outcome of the negotiation.

Credit managers find themselves negotiating with salespeople and with customers on a daily basis. Collection specialists negotiate with delinquent customers so regularly that even a small improvement in their negotiation skills will pay big dividends over time.

Here are some negotiations tips that can be put into practice immediately:

  • Identify the problem (such as a past-due invoice or a disputed deduction) as a problem we need to resolve rather than a something that I need you need to fix. The reference to "I" means you have probably not addressed the customer's concerns and interests. A reference to "you" can easily put the debtor on the defensive where it is hard for them to negotiate rationally.

  • Learn how hard you can push for payment and still maintain the goodwill of the customer, and do not push any harder. Pushing too hard makes it difficult for customers to agree to pay even when your position is clearly correct.

  • If a customer rejects your payment proposal, ask them for their idea or ideas to solve the problem. If a customer refuses to make any payment commitment, start asking questions such as these: Are you the final decision-maker about this payment? What is your exact title? Whom do you report to? Do you have any plans to pay us at this time? What caused this problem or crisis? Do you have a short-term fix and a long-term fix? If so, what are they?

  • If a customer refuses to answer your voice-mail messages about a delinquent balance, ask them for their advice. Assume you have been trying to reach a delinquent customer for several days to discuss their account. Try leaving a message like this: "I have left several messages asking you to call me to discuss a past due balance of $ xx.xx. Would you please call me just to let me know what I need to do, or whom I need to talk to about this serious problem?"

  • If your customer makes an unacceptable payment proposal to you, rather than rejecting it outright, ask instead what the customer can do to strengthen or to improve the offer. You might be pleasantly surprised to be offered collateral, security, or even a better payment plan before even beginning the negotiation process.

  • If you are proposing a deal, offer the customer more than one option to show flexibility. For example, you might state, "We would accept an immediate payment of 50% of the outstanding balance with the remainder due in 30 days, or we would accept a payment of 25% now along with weekly payments of $xxx.xx over the next four weeks to clear the past due balance."

  • Do not rush through negotiations. Take time to ask questions, to gather information, and to evaluate your customer's financial situation. The credit manager is normally trying to collect and to determine whether open account sales can take place in the future.

  • After any negotiation, take the time to confirm the points of agreement. This can easily done with a brief preamble. You might say "I know we have not resolved all the disputed items, but I would like to make certain my notes are accurate about the items we agreed on. According to my notes, it was agreed today that . . ."

  • If you are negotiating with a relatively new account about the status of a past-due balance, give the customer a face-saving way out. For example, you might indicate, "As a new customer, you might not have the correct terms of sale in your payables system. Our terms of sale are Net 30 days from date of invoice. Please make a note of this for future reference."

  • Avoid arguments with customers at all costs. Arguments will cause the debtor to become more defensive and more entrenched. The correct strategy when an argument is on the horizon is to
    1. Disengage.
    2. Verify the relevant facts, and gather information that either confirms or repudiates the customer's position.
    3. Reengage the debtor. Identify the points upon which there is agreement. Describe the relevant facts that you have gathered subsequent to your last conversation that support your position.
    4. Ask the customer for their comments about this "new information," and then listen to your customer without interruption.

The Vanderbilt University study suggested that negotiators do better if they are given specific rather than abstract goals. For credit managers and collection specialists, the specific goal is fairly simple: Get a commitment for immediate payment of the entire past-due balance. Anything short of immediate payment in full is a negotiated settlement.

Editor's Note: This article originally appeared in the Credit & Collection Manager's Letter.

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·  Heading Off Collection Problems - A Four-Step Process to Balance Bad Debts
·  Nine Building Blocks to a Successful Negotiation
·  The Art of Negotiation: Collecting Via the Telephone
·  What Services Should You Demand of an Outside Collection Agency?
·  Dialing for Dollars: Ten Ways to Improve Your Telephone Collections
·  Sun Tzu's Art of War and Cost-Effective Collections Litigation
·  Collaborative Solutions-The Real Art of the Deal

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