Negotiating with debtors part 3 – Payers vs Stallers

When it comes to customers and invoices, they tend to fall into one of two camps. Those who pay (or want to pay, but can’t right now and are upfront about that, which we’ve talked about here) and those who don’t have any intention to pay.

If you encounter a payer, it’s a pretty smooth process to deal with, and the end result will be that you recover the money you are owed. But those who have no intention to pay will either ignore you altogether, or they will meet your attempts to recover the balance with stalling tactics. The problem is, sometimes the customers who want to pay but can’t right now can look very similar to a staller. So it’s important you know how to handle the two, and how to tell the difference in the first place.

Payers Vs Stallers

You might think that it’s a fairly obvious difference. After all, a payer will pay, and a staller won’t. But reality isn’t as black and white as that. Some payers might not be able to pay you, and some stallers will be perfectly capable of payment the same day. So, how can you work out whether a debtor is a payer or a staller, and how do you handle them?

A good rule to go by is that:

A Payer: Will try to work out a way to pay you the amount owed as soon as possible. They will be willing to discuss options and agree to something concrete, sign agreements or anything else official. They will usually be pretty open about why they can’t pay you everything just yet, and express the desire to pay eventually.

A Staller: Will try to distract you and defer payment for as long as possible. They will rarely agree to any sort of plan or be pinned down to specific dates and times. Instead, they will try to keep things vague, playing you for time and hoping you will just write them off as a bad debt.

Tell Tale Signs Of A Staller

Once you know what to look for, a staller is pretty easy to spot. The first thing you need to do is listen to them explain their situation in detail. This is the number one rule when dealing with all debtors, as listening to their circumstances arms you with the information you need to get an agreeable outcome. Once you have given them the chance to explain, it’s time to work out if this person is a willing payer. It’s often easiest to put the ball in their court – simply ask “So Mr. Smith, how are we going to take care of this balance today?’. Their answer will tell you a lot. A willing payer will make a suggestion – usually a payment plan or something similar. But a staller will try to find an excuse to steer the conversation in a different direction, avoiding answering and refusing to be pinned down to anything.

Handling Stallers

Stallers can be difficult to handle, because they always give you the impression that the payment is ‘on the way’. This is very rarely true, and will just result in another phone call a few weeks later, and a repeat of the same conversation. So there is only really one approach you should take when dealing with a stalling customer. Listen, identify, provide them with an achievable and binding payment option, and if they still won’t commit, pass their account over to your debt collection agency to handle. And then actually do it.

The difficult part is learning to recognise when you are ‘throwing good money after bad’, when the time your business puts into collecting the balance actually negates any profit you may have made. And then make sure you don’t do it. This is ultimately the end goal for the staller – they’re hoping that it will stop making sense to chase the debt and that you will just write it off instead. If this happens, the staller has won. So instead, you should spend your energy learning to recognise such people early on. If you can do that, then you can turn their account over to your collection agency right away and minimise the financial and time impact the staller will have on your business.

4 Things To Remember During Negotiations

• Listen to your customers and try your best to understand their personal circumstances.
• Apply the information you have to your standard criteria to get a starting point for your negotiations.
• Start by asking the customer to suggest terms that work for them. You can then counter their offer with higher payments over a shorter period. Never bid against yourself.
• Always be willing to say no to any offer lower than you’re willing to accept. If you feel the customer is stalling, just remind them that their account will be moved on to a collection agency next, and that this is their last chance to work it out with you directly.

That concludes our 3-part series on negotiating with debtors. At Debtcol, we know that late payments can sometimes be settled in house, before any external parties need to be involved. And it’s great when that happens, as it means you will be able to preserve a relationship with that customer. But sometimes that isn’t possible, which is where we come in. We work with businesses to handle their late payments on an outsourced basis, helping recover funds quickly, and all while allowing them to maintain their relationship with their customers. For more information on how we could help you increase your collections while reducing the time you spend collecting, get in touch with us today.