Getting Paid – Be Prepared to Negotiate

You can’t get blood out of a stone.

Sometimes, and regrettably it has been happening more and more during these Covid-related times, businesses simply cannot pay their bills.  They aren’t insolvent but reduced business and closures have taken a serious toll on day-to-day operations of many firms so that they simply haven’t got the capacity to pay creditors when invoices fall due.  As a credit controller there isn’t much value in trying to force the issue.

If the money ain’t there, it ain’t there.

So, rather than beat your head against a brick wall trying to compel the debtor to pay up it would be more prudent – and a show of goodwill that will endear you to the customer (and those they tell) and keep them content to do more business with you when times are back to normal – to look at an arrangement to pay that will be beneficial to both parties.

Negotiating may not be easy.  Remember you are both starting off at polar opposites:  you want everything paid in full now, the debtor wants to have to pay nothing until they feel financially secure.  There has to be common ground.

Begin matters by requesting the full amount be paid immediately – you never know, you may have caught the debtor at a time when he may be able to do so and if you don’t ask …! 

Be prepared to offer an incentive by way of a discount if payment is made immediately. If that doesn’t bring a result, request that a significant sum be paid right away with the balance to be paid within two weeks’ time or other appropriate time.  Discount waived.

Should that not be possible, then you are left with the option of a payment arrangement whereby a set amount is agreed upon to be paid on a regular basis until the debt is finalized.

When this situation arises it is imperative that it is formalized by way of a confirmatory email or letter spelling out the following:

  • The agreed amount to be paid;
  • the regularity of payment (and you should push to have it made on a weekly basis on a set day;
  • an EFT arrangement to be established;
  • The term over which the arrangement will run;
  • When arrangement reviews will occur;
  • Whether any interest or charges will apply;
  • What the consequences will be if the arrangement isn’t adhered to.

Have the debtor acknowledge the formal arrangement by return email or signed letter.

The consequences of not meeting the payments will, again, be difficult to enforce and really you won’t have a lot of flexibility in compelling payment.  Keep in regular contact and be prepared to encourage, cajole or coerce the debtor to be considerate of your needs as well as his own.

How you act will be dependent upon how the debtor breaks the agreement.  If he approaches you with explanations of further difficulty then you may need to re-appraise the agreement and possibly negotiate another.  If payments are however simply stopped with no reason given, you may need to be firmer with the debtor if that is possible.

One way that that can occur is to suggest that a specialist third party become involved.  That will distance you and your Company from the debtor’s problems and will allow you to continue to be the “good guy”.  Indeed, the specialist third party option is a good one in that they that will have the time and capacity to monitor arrangement adherence rather than you tying up resources and schedules to do it.  They would report progress as required.

 Such a specialist is Accounts Receivables Solutions.  They have the skills, knowledge and track record to perform this task for you. 

Ease your negotiation frustrations and outsource your agreements, call Adrian Stead at Accounts Receivables Solutions on 0427 881 818 or email him at to discuss your needs now.