Chapter 9

Overcoming Disputes, Real or Phony

In This Chapter

Talking debtors into admitting what they owe

Separating real disputes from stall tactics

Breaking down and resolving actual disputes

Negotiating to achieve good collection results

When you’re putting pressure on your customer to pay money owed to your business and your customer denies owing part or all of the money, you have what’s called a debtor dispute on your hands. Whether the disputed amount relates to the entire account balance or just a portion of it, you want to resolve the dispute as quickly as possible.

To do that, you first need to determine whether the dispute is legitimate or whether the debtor is using stall tactics, and then you need to take steps that lead to payment on the account. This chapter shows you how to see through stall tactics, identify and address legitimate disputes, and achieve a resolution that ends with you collecting what’s due to you.

Getting and Using Admissions from Your Debtors

An admission is a statement from the debtor conceding that he owes you money. An admission may be full (“I owe you all of the money you claim”) or partial (“I owe you some of the money, but dispute the balance.”) The admission can come in a number of forms, including an oral statement (for example, during a meeting or phone call), in writing (such as by letter or e-mail, or in a repayment agreement you negotiate), or may be implied by the debtor’s actions (such as sending you partial payment on your bill).

Getting the customer to admit owing the debt isn’t always easy. Using the same techniques described in the Identifying and Resolving Disputes section later in the chapter can help you obtain an admission from your customer.

Getting an admission of a debt, or even part of a debt, is the next best thing to getting paid — as long as you handle it right. When your debtor admits that he owes you money, you can

Use the admission in court to help prove the debt, often conclusively

Remind the debtor of his previous admission if he tries to raise the same excuses for delaying payment later: “We’ve already resolved that, and you admitted you owe the money.”

Once the debtor admits owing you the money, the only factor that usually remains to be discussed is exactly when payment will be made. The debtor knows, or will quickly understand, the power of an admission in court. You can tell your debtor, “If we have to go further in this process, the judge is going to make quick work of our case and compel you to pay because you’ve already admitted you owe me the money.”

The following sections outline how to document the admission after you have it and how to collect the funds the debtor admits to owing.

Documenting admissions: Creating a paper trail

Don’t think of getting admissions as a passive process, but rather as an active one. Any time you’re in contact with your debtor, you’re fishing for admissions — especially written admissions. Take any opportunity to get an admission from your debtor that the money is owed. Hook your debtor and reel him in.

After you have an admission, you’re in an excellent position to build on it. Stay cool, professional, and polite. It really is like fishing: Don’t jerk the line before the fish is on the hook.

Documenting oral admissions

Although your goal is to get a written admission, that’s not always possible. But you can create a paper trail with an oral admission by doing the following:

Note any oral admission in your records.

Follow up the oral admission with a note or memo.

Send a confirmation of any oral agreements, and ask the customer to sign and return it.

Documenting payments

A partial payment is also an admission. Why would a debtor make a payment on the account if he didn’t owe the money? A payment is an imperfect admission. It doesn’t establish the amount the debtor concedes to be due, and it leaves defenses open to your debtor, such as a payment having been made by mistake or having been made before a product defect was detected. But in most cases, it establishes that your bill has some level of validity.

Documenting any disappointment

Suppose you’ve reached an understanding and sent written confirmation to the debtor but haven’t heard anything back — no confirmation, no check, no apology. Send another letter reiterating the debtor’s admission and the agreement, and expressing your disappointment at the fact that the debtor didn’t follow through.

Collecting the admitted balance

Communicating with debtors can be frustrating, even infuriating. It’s worse when you know that they’re making false claims and excuses just to avoid paying. You must nonetheless continue forward professionally yet aggressively to determine whether the dispute extends to the entire amount owed. If the complaint relates only to some of your goods or services, press for payment on the rest.

At some point in the conversation, for example, a debtor may admit: “Okay, I owe you $850 on invoice #123, but I’m disputing the remaining invoices.” You should demand payment of the admitted amount by a specific date (for example, “within ten days”). Particularly if you believe the debtor’s excuses are stall tactics, you can caution the debtor that you’re going to have to take this collection process “to the next level” unless the undisputed $850 is paid by the specified date. If you do end up in court over the debt, you can try to use any nonpayment of the admitted portion to cast a shadow across the debtor’s credibility in relation to the disputed portion.

Collecting the admitted portion is just part of the resolution. You should continue to try to resolve the disputed portion of the account and set a due date in writing for that as well. See Chapter 10 for help on putting the deal in writing and Chapter 11 for guidance on increasing pressure to collect the remaining balance.

Identifying and Resolving Disputes

Some debtors will present a dispute that involves a complex set of facts. The debtor’s objections may be valid, or she may be throwing up a smoke screen to delay or avoid paying your bill. Either way, if you try to deal with a complex set of objections as if it’s one huge, complicated blob, you may conclude that it’s impossible to deal with. And in that form, you may be right. So change the form.

The following sections give you pointers for getting the necessary facts from the debtor to pinpoint the problem, researching the issues, and resolving the dispute efficiently and quickly. Along the way, you must document your findings and actions, so we provide some hints on that as well.

You have to evaluate defenses on a case-by-case basis. The notions that all debtors are liars and all defenses raised by debtors are really just stall tactics simply aren’t true. Also, keep in mind that everyone makes mistakes occasionally. Sometimes the debtor’s objection is sincere but wrong, and other times a problem with the account really exists.

Asking, then listening: “What seems to be the problem?”

When a customer has a complaint, sometimes the best way to get the information you need is to ask a simple question: “What seems to be the problem?” You then must listen carefully and analytically to your customer’s response.

If the customer’s answer is too vague or general to deal with effectively, ask follow-up questions that require specifics. Consider the following examples of common customer objections and ways to respond to them:

The customer says: “The salesperson messed up the order.”

You need to inquire:

• Which salesperson? Ask for the salesperson’s name and other pertinent information, such as what office the person works in, so you can track her down for comment.

• Exactly what does “messed up” mean? Get specifics of the conversations or representations, so you can figure out how to respond to and overcome the objections.

• What invoices are in question and what specific issues are being raised in relation to each of those invoices?

The customer says: “I didn’t get what I ordered.”

You need to inquire:

• Exactly what do you mean? Get details about what the customer ordered (or what she thinks she ordered) and what she received.

• Do you have a copy of your purchase order? (Of course, you have a copy in your files, so you may be able to cut off the objection by faxing your customer a copy.)

• What exactly was received? Were items missing, or were incorrect items substituted?

The customer says: “Your billings are messed up” or “I’ve been overcharged.”

You need to inquire:

• Exactly what do you mean? Make inquiries to turn this from a vague complaint to specific objections about specific billings. For example, was the customer double-billed for a single order? Did you forget to credit him for a returned shipment? Was the price of his order misquoted?

• Which invoices are you referring to? (To clarify, ask for the associated invoice numbers.) Get the information you need to verify the complaint, track down any error, and either fix anything that you did wrong or establish that the objection isn’t valid.

Because many debtor disputes have some basis in law, see the Chapter 6 discussion of the Uniform Commercial Code (UCC) for disputes involving the sale or leasing of goods. All states have adopted the UCC, and it covers all sales and leases of goods (but not contracts for the provision of services).

Your goal is to get specifics, because the details you get from your customer help you resolve the dispute more quickly. But be careful not to give the debtor ideas for new disputes. For example, if you say, “That salesman’s always getting orders wrong,” you can expect a customer who is stalling to take that as a cue to blame more make-believe problems on your salesman.

Continue to listen carefully to the customer’s answers and make notes as you listen. Those notes will prove invaluable as the dispute resolution process evolves.

Beware the debtor who always has a new complaint. This is not a process you repeat indefinitely. After the issues raised in your detailed set of notes are resolved, insist that payment on any remaining balance is due now. After you’ve given your customer the opportunity to detail all reasons for nonpayment, and you’ve addressed those excuses, you’re justified in rejecting any new claims related to the same goods or services as a stall tactic. (Check out “Detecting and Dealing with Stall Tactics” later in this section for details on handling those).

After the facts are clear, the ball is in your court. You need to track down the facts at your end, assemble a file of documents and notes relating directly to the debtor’s claims, fix any errors at your end, and insist on getting any payments that are due. (See the “Getting and Using Admissions from Your Debtors” section earlier in this chapter for the specifics of this process.)

Consider your debtor’s perspective

Consider the debtor’s perception of the events she’s complaining about. When communicating with your debtor

Listen carefully to what she’s saying or threatening.

Try to make some sense of her statements or threats, even if you have to stretch your imagination.

Maintain communication with the threat-maker, regardless of how difficult this is.

Attempt a calm-after-the-storm approach: Speak more slowly and calmly and in a lower tone of voice in your conversations with the debtor.

Pretend that whatever happens in this communication will be on tomorrow’s front page. Can you picture the story “Birmingham business owner threatens homeless housewife with . . .”? You get the idea.

Remain open to reaching a reasonable compromise. Sometimes you find a solution that’s somewhere between what you want and what the debtor is demanding. An obvious compromise may work.

Addressing the issues, one by one

By getting specific details relating to the debtor’s complaints (see the preceding section), you can address each of these issues to resolve the problem. Consider your debtor’s dispute:

Is the problem at your end? Is it something you or somebody in your company did wrong, or something your company is responsible for? Fix it.

Is the problem at your customer’s end? Consider

• Does the customer understand his role in the problem? If a customer is reasonable, you may be able to get him to realize that the problem’s something he must fix or pay for. But he may be angry or insist that you should be responsible for that cost.

• If the problem is relatively minor and can be remedied for a modest cost, will accommodating the customer get you paid? Will you be setting a bad precedent that may cause you to absorb similar costs when dealing with this customer in the future?

• If the problem is more serious or costly, what do you have to do to resolve the problem? Can you meet the customer halfway (or part way)? Can you collect the bill while maintaining the customer relationship, and is that an important consideration?

Is the problem legitimately at both ends? Did a miscommunication or other error somewhere along the line cause your customer to believe, for example, that his entire order (not just one of many items) would be discounted?

For each objection raised, go through a similar evaluation and decide the best approach to resolution. We could fill this book with possible objections and responses to those objections and still not cover them all. Generally speaking, if some problems are easy to fix, you can fix them first, but otherwise try to fix objections that may get you at least a partial payment pending your resolution of the rest of the customer’s objections.

A complex dispute may involve different people and departments within your company. If that happens, assign parts of the problem to the appropriate people or departments and have them report back, in writing, within a specified time.

Handling major disputes

Major disputes typically come in one of two forms. They can involve a great deal of money or the sale of many products, such that even though the dispute itself is simple, the amount of money involved makes it critical to your organization. Or they can be complicated in other ways, such as

Disputes that present complicated factual claims that require investigation. Contact people who can respond to the debtor’s factual allegations, such as accounting for issues with billings, engineering for product issues, sales for promises allegedly made about your products or services, and shipping for issues of late delivery (just to name a few).

Disputes that raise tricky legal issues, including those outlined in Chapter 6. Start a factual investigation just like you would for a factual claim but, if the allegations are serious or the stakes are high, consider involving the company attorney. Better to be safe than sorry.

Disputes that center upon errors made by somebody within your company, or by somebody else but under circumstances that make your company responsible. Contact employees and other people involved in the dispute who may have knowledge of the alleged errors or who may be able to direct you to others who have relevant knowledge.

You should notify your boss of any major dispute, identifying departments and employees who may be involved and getting clearance to bring in the company’s lawyer if necessary. Unless, of course, you are the boss.

The worst scenarios, of course, involve “all of the above.” Your job is to view disputes of all sizes as challenges and to tackle even the most difficult ones head-on. Follow the mantra, “This business has no problems, only challenges.”

Avoid playing games with minor disputes

A minor dispute is one you can fix on your own, at relatively low cost, or with a relatively modest concession to the customer. Even when the customer is at fault, sometimes the best way to resolve a minor issue is to simply concede the point. For example:

If your debtor argues that she was overcharged a dollar, credit the dollar. That’s not a sign of weakness. Rather, it’s using good, solid, business decision-making to efficiently resolve a dispute.

Your debtor holds up a payment of $1,000 on invoice #123 because she objects to a $35 interest charge on a prior invoice. You can waive the interest or try to defer the issue (although the debtor may not go for that) in order to get the payment in the door.

It’s okay to concede a minor glitch in order to resolve a much larger issue. Such a concession isn’t an admission that your company is disorganized or that your products or services are defective. Instead, it demonstrates that you have the good sense to promptly and efficiently resolve disputes. Conceding small issues may also be a good public relations move with a customer who, although delinquent on this debt, may turn out to be a good customer in future transactions.

Empower your employees who deal with delinquent accounts to make small concessions in order to resolve minor disputes.

Documenting your position

To resolve a dispute, you need proof of your stance on the issue. Without proof, you can’t convince your debtor of your position. A debtor with sincere doubts needs to see evidence that you’re right. A debtor who is scamming you needs to see that you can shoot him down in court. After a dispute erupts, rest assured that the debtor is gathering all evidence that may help to resolve the dispute in his favor.

You can use pretty much any document you can find, so gather them all. Use your entire credit file, as outlined in Chapter 4. Also compile the notes and documents you create and maintain in the course of dealing with your customers and debtors, as described in Chapter 7.

Support your claims with documents from your file

You’ve already broken down the debtor’s dispute into bite-sized pieces. Now support each of those pieces with the proper documentation. For example, your customer claimed that the charge from the July 9 invoice was wrong as it appeared on the monthly statement, so you sent over a copy of the July 9 invoice to establish that your monthly statement of account is accurate. After that’s done, you just may be able to convince the debtor of your position, resolve the dispute, and get paid. If not, you’re prepared to prove it to somebody else, including a mediator or judge.

If a dispute escalates, the documents you and your debtor gather may very well end up being used as evidence in a court case. You don’t want to find yourself in court where the only documents available as evidence are those maintained by the debtor.

In most cases, the person who arrives at a negotiation session or court proceeding with the best paperwork and the best prepared file prevails.

What to do when your paperwork falls short

To be prepared for this assault, anticipate these common billing complaints:

Inaccuracies in billing practices such as double billings: Examine invoicing to determine whether you can meet the debtor’s challenges head on or whether you need to back down a bit and settle for less.

Gaps in time: You haven’t billed the debtor in months, and she wants to know why the billing has suddenly resumed, making your bookkeeping appear disorganized and sloppy.

No contract to support the invoices: The debtor never bothered you before about paperwork, but now that she owes money and funds are tight, she suddenly requests the contract and copies of invoices for a second, third, or fourth time.

No contract terms that would justify interest charges or late fees appear on your invoices: Paying the principal balance is one thing, but the debtor sees interest or late fees as your rubbing salt in the wound.

No purchase order matching up to the invoices: Suddenly the debtor claims that all purchases must have a corresponding purchase order.

Inconsistencies between the statements of account and the invoices.

Missing change orders in support of invoices for extras.

No replies to the debtor’s letters or e-mails making claims of problems: If you receive written communication citing problems, you should respond in writing to avoid appearing as if you ignored the problems. Keep copies of all correspondence in your collection file.

Poker players develop a feel for when to hold ’em and when to fold ’em. Collection work can be very similar, particularly when you don’t have a good hand — that is, when you lack good backup paperwork.

Should your debtor refuse to make payment without a review of the paperwork she believes you possess, take a hard look at your collection file. You won’t prevail if you go to court with poor paperwork, so if your documentation is weak, consider settling the debt for less than is owed. Giving up part of your claim is painful, but it beats going to court and losing.

Detecting and Dealing with Stall Tactics

In debt collections, separating actual disputes from stall tactics is critical. Fortunately, it’s rarely difficult. Debtors who are stalling tend to present complex objections that take time to unravel and answer, not specific complaints that are easily answered.

A debtor who is stalling may also throw up a series of excuses. As you resolve the last complaint, he offers a new excuse for nonpayment in its place. This tactic is a sign that you’re probably not going to get voluntary payment from the customer, and you may benefit from consulting Part III of this book on stepping up your collection efforts. But first read through this section, including the material on short-circuiting stall tactics.

The following sections identify common stall tactics and counterpoints you can respond with, as well as ways to beat those who make such statements at their own game.

Don’t assume that all disputes are stall tactics. You must give serious attention to valid disputes concerning collection of past due accounts. The reputation of your business may be negatively impacted by anything less than a full investigation of all issues raised, especially if your company is at fault.

Responding to common stall tactics

You’ve heard them, and we’ve heard them. When people don’t want to or can’t pay you what they owe, they trot out all sorts of excuses. Here are some of the more common “I-don’t-want-to-pay” debtor comments and what you can do or say to overcome them:

Stall tactic: “I don’t have enough money on hand to pay you in full.”

Solution: Remind the debtor of possible untapped sources of funds: Money can be borrowed from lines of credit, credit cards, advances, or even the old standby, friends and relatives.

Stall tactic: “Even if I had the money, I wouldn’t pay you because I don’t owe you the whole amount.”

Solution: Work toward dispute resolution as discussed in the later section “Negotiating: Planning on Some Give and Take for a Win-Win.”

Stall tactic: “I have a problem with some of your invoicing; the numbers don’t make sense to me.”

Solution: Review each invoice, or explain how your invoicing system works until you relieve the customer’s concerns.

Stall tactic: “I had a problem with some of your goods and services and my customers are not happy; and because they aren’t paying me, I’m not going to pay you.”

Solution: Break down and resolve the specific concerns behind this statement as discussed in the earlier section “Breaking Actual Disputes into Bite-Sized Pieces.”

Stall tactic: “Your account is so messed up; I have no idea whether I owe you a penny.”

Solution: This type of statement is a classic attempt by the debtor to make the account “fuzzy” and irresolvable. Keep discussing the specifics until the “messed up” account is un-messed.

Whatever your debtor’s reasons or excuses for not paying on time, make your objective clear to the debtor: You need payment in full by a specific date. Otherwise, the collection process will move on to the next level, and continued nonpayment could result in a lawsuit. (Remember, though: Never threaten a lawsuit unless you intend to bring one. See the discussion of collection practices and consumer law in Chapter 6.)

Short-circuiting stall tactics

If a debtor gets away with stalling payment on an account, your company ends up footing the bill for any shortfall in cash flow. In a difficult economy, your cash flow may be strained even when your customers pay on time. You must cut stall tactics short to both improve your cash flow and regain control of the “game.”

If a debtor is stalling for more time to pay, you want to let him know that you’ve seen through his tactics. After you eliminate the debtor’s excuses, you just have nothing left to do other than count the money as it comes rolling in the door . . . sometimes.

Some of the best ways to short-circuit stall tactics are

Make your objectives known. You expect full payment by or before a specific date. Keep it straightforward. For example: “With the exception of [one or two legitimate disputes] raised on [one or two specific invoices] that I am researching, I expect full payment of the remaining balance of [the specific amount of money that is not in dispute] by [a specific time]. I’ll have information back to you on the disputed invoices by [a specific time].” Have your calendar in front of you while you’re on the phone, and pick a date a week or so out. If full payment isn’t received by the agreed date, you’re dealing with a debtor who is stalling for time and can’t be trusted.

Require that disputes be supported by facts. A general allegation that “This invoice just doesn’t seem right” or “There must have been a mistake somewhere at your end” just isn’t sufficient. You can’t resolve that kind of dispute because you have no facts to work with. Make the debtor specify what’s wrong.

Quickly resolve any disputes. Insist that you need to know now what disputes exist, immediately followed up by any documentation the debtor has concerning the disputes. (“I hear what you are saying about an alleged dispute, but I need you to back up your comments with full documentation. Can you fax it to me this afternoon?”)

Use your instincts and good business sense, plus a review of your file documentation, to determine whether the debtor is raising a legitimate dispute or is simply stalling for time.

Negotiating: Planning on Some Give and Take for a Win-Win

No business is perfect; they all make mistakes along the way. Allow for imperfection as you communicate with debtors. Even when you’re 100 percent in the right, compromising often gets you paid more quickly and perhaps also helps you preserve a business relationship that is strained by the dispute. In other words, be willing to negotiate.

Knowing why negotiating is a smart move

In today’s uncertain, fast-paced business world, good negotiation skills are an essential part of successful credit and collection policies. Keep the following objectives in mind as you put your best foot forward in the negotiation process:

Preserve goodwill. Negotiation helps you preserve goodwill, break down communication barriers, and arrive at a new account balance that your debtor will pay on an agreed date.

Create a win-win result. Although negotiation may reduce the amount of money you receive from the debtor, compromise helps maintain relationships with debtors who are acting in good faith while getting you paid.

Take what you can get. After all, getting something is better than nothing, and taking less than you show on your ledger is not a sign of weakness. Indeed, when debtors are unable or unwilling to pay you in full, negotiating is a sign of business maturity. Even when there’s no dispute as to the amount owed, negotiation can help you get paid by a debtor who has little money to disburse among numerous creditors before that cash runs out.

Know when it’s time to move forward. Sometimes you must be flexible in your negotiations, use your authority to make deals, and be willing to concede on issues even though you’d rather not. Sometimes, for example, litigation is not an option, and the debtor refuses to budge much further. Settling for less than you deserve may be better than having the account remain open and unresolved indefinitely.

Preparing to negotiate

You’re better at negotiation than you think. You have negotiated agreements all your life, starting when you were two years old and made deals with your parents. And you were a pretty good negotiator even back then — if you don’t believe me, ask your parents. Continue to develop those skills.

There’s no master list of all the skills necessary for successful negotiations, and, truth be told, such a list would vary depending upon your personality. But here’s a simple maxim: Negotiation is 90 percent motivation and 10 percent intelligence. In other words, if you’re highly motivated to resolve a problem, you’re much more likely to succeed in a negotiation.

Many people are tentative when it comes to negotiating. They worry that they won’t strike the best possible deal or that they’ll be unsuccessful in dealing with their opponent, particularly when they’re up against attorneys or other professionals. Worry causes many people to get bogged down in the details and forget to look at the big picture. In short, worry gets you nowhere.

Preparation for a negotiation is often the most important factor in achieving a successful outcome. Preparation includes

Organizing your thoughts: You may choose to create a written outline. Don’t get caught up in trivial details involving small amounts of money or increments of time. You need to see the forest through the trees.

Writing down a list of goals: List goals for the negotiation that may help you get paid. For example, your goals may include key invoices that you want paid, the amount you hope to collect, or the date by which you want payment.

Prioritizing your goals: Number your goals, or put an asterisk next to the ones that are crucial and a question mark next to the ones that can be compromised.

Staying flexible: As the negotiation proceeds, jot down points you hadn’t thought of before but that are important, and incorporate them into your goals.

Setting a pace: Don’t try to race through the process or keep up with a fast-talker. Decide upfront that you won’t reach a conclusion without giving yourself time to think about it. You can buy the time you need by stating, “We’ve covered many good points. Are you available again tomorrow morning at 10 a.m. to see whether we can reach a conclusion?”

Sharpening your negotiating skills

Saying “practice makes perfect” may trigger a cynical response, but it’s really true when it comes to negotiation. The more you negotiate, the more confident and skilled you become. For better results

Know who you are up against. Attorneys and other professionals may try to throw their weight around, and an experienced negotiator can dominate a novice. If you’re up against a pro, either get your own attorney involved or be well prepared and know the law so you don’t get bluffed into submission.

Be flexible, but firm. By definition, negotiation means being flexible to some degree, but not every point should be open for discussion. When you’re right, you shouldn’t feel obligated to meet the other side halfway.

Try not to make the first offer. In most cases, the debtor will view any number you raise as a worst-case scenario, and you’ll end up having to settle for less. Don’t set a ceiling on your collection by making the first offer; instead, try to get the debtor to set a floor.

Ask for more than you really expect to get. Never expect your debtor to agree to your first demand. Start high so that you can negotiate down to where you really want to be. But keep your demand within reason. Your debtor’s not stupid.

Concede some minor points early. Concession of minor points can help you bargain more effectively when you arrive at a major point. You can say, for example, “Remember when I conceded to give you a credit on invoice #123? Now I need you to work with me on invoice #456 because that’s important to me.” In conceding early, however, be wary of conveying the perception that you’re a weak negotiator and will concede on every point. You have to strike a balance.

Make your sticking points known. It’s okay to let the other side know that a particular point is important to you; it’s a sticking point and you aren’t giving much, if any, ground on the issue.

Think on your feet. Keep your most important goals in mind throughout your negotiation. List your key goals on paper and have them in front of you (but don’t let your adversary read them).

Provide minimal explanation. Expect the other side to try to take advantage of any information you volunteer. For example, don’t say, “My boss will be mad at me if I only get $1,000 out of this deal. He even hinted that our company may have to file for bankruptcy if we don’t improve the collection of our receivables.” Making a statement like that opens the door to obnoxious and irrelevant responses like, “I’m sure your customers won’t be pleased to hear that comment. Maybe I should tell them. Besides, if you’re going to file bankruptcy so you can short-change all your debtors, why should I pay you anything at all?”

Put any agreements in writing. If you do reach a resolution, confirm it in writing immediately. If you have a computer or other technology available, such as e-mail, fax, or other communication devices, even your cellphone, use it without delay. Remember, “It ain’t done if it ain’t in writing.” (See Chapter 10 for more on this.)

When Your Efforts Fall Short

Despite your best efforts, not every negotiation will be successful. If your attempts to reach a reasonable resolution are stonewalled by your debtor, you need to consider different approaches that may move the process forward.

Getting legal or business advice

Some issues raised by debtors require careful review. The issues may have legal implications with the potential for damages being assessed against your company if the matter ends up in court. For example, if a debtor declares bankruptcy

You may not stop all collection efforts after the bankruptcy is filed, and violate the automatic stay.

You may pursue a claim after the debt has been discharged by the bankruptcy court.

If you encounter unusual facts or legal issues and aren’t sure about your next step, consult with a CPA or a lawyer to avoid making an uncomfortable situation worse. Don’t make a mountain out of a molehill. In most cases, a professional can clarify the issues and confirm (preferably in writing) your next step to get back on track to collection.

One of the issues raised in Chapter 6 is a claim that is beyond the statute of limitations and thus cannot be enforced in court. Without this book, your collections professional could clarify for you that you can continue to negotiate with the debtor and try to get the debtor to agree to pay at least part of the debt. But you should not threaten litigation you don’t intend to bring.

Seeking advice from professionals, including your lawyers and accountants, is always a good idea. Also consider sounding out your peers and mentors, as they may be able to share excellent, mature approaches to making good business decisions. The wisdom of others can help you increase your knowledge and improve your ability to negotiate with debtors. As you act on that advice, also trust your instincts to guide you toward resolution of collections challenges, even those that once seemed insurmountable.

Knowing when to take your collection effort to the next level

A simple but vital rule of collections is to never let up on the pressure. As a corollary to that rule, the moment meaningful communication with your debtor ends, you need to move the matter to the next level. Chapter 11 tells you how to increase intensity on a debtor to achieve collection, and Chapter 13 explains when and how to bring in debt collection professionals.