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Payment Plan Negotiations: The Secret is Taking Control

by Robyn Barrett | Jul 23, 2014 | Accounting, Cash Flow, Collections

Let’s start off with my favorite negotiation skill – silence. Shhh. Don’t say a word. When it comes to setting arrangements for a payment plan with the debtor, time and again collectors begin negotiations on the wrong foot by talking first and offering up a payment plan.  Right there you are negotiating against yourself.

Maintaining Control

If a debtor tells me he or she can’t come up with a full and immediate payment, my response is always, “How short of the full amount are you?”  The point is to extract from the debtor the amount he claims he is capable of paying. If you give him a figure, you could quite possibly be violating my basic negotiating rule: Never bid against yourself. Once you do that, you’ve lost control of the situation.

Once the debtor lays his cards on the table, always counter with something like, “I may consider that offer, if you can make it more palatable by including a series of postdated checks (or a promissory note or personal guarantee,” etc).

While the debtor on the other end of the phone may protest your suggestion, you are now in control.

Your Company Is Not a Bank

You can make it clear that you’re not a banker offering loan terms. If the debtor wants to make payments, they must come up with a better offer than to meet you halfway. By drawing him out, you’ve put yourself in a position to either obtain a shorter term or possibly improve the legal status of the debt with a more favorable instrument. And that’s good negotiating.

Once you reach an agreement with the debtor, always confirm payment arrangements in writing. And remember let the debtor do the talking so you don’t end up negotiating against yourself.

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