Getting dollars in the door is always a top priority. After all, how many times have you heard “I never received the shipment” or “I didn’t order the product” or “The product was broken when I received it” and really didn’t know what the law says about these objections? Well, it happens all the time in the commercial collection business and it is important for commercial collector and the collection manager to know exactly what the law says about these typical “debtor defenses”.
This seminar is an effort to cover some of the common debtor defenses or objections to paying the account.
Interestingly enough, the debtor’s goal in the commercial collection process is just the opposite of your goal. The debtor would like to make the whole matter very fuzzy and very confusing in addition to making it much more complicated than it really is. If the debtor succeeds, then the collector gets confused and even the client can be confused as to how much money is owed and what the real issues are. When that happens, collection is not successful.
Your goal is to make it very clear exactly what the issues are. Your goal is also to make it clear how much of the account the issues apply to. For example, if the total amount of the claim is $2,500.00, the first thing you want to find out when the debtor makes an objection to payment is how much of that account is actually disputed. If $1,000.00 out of $2,500.00 is disputed, make a clear note of that and of course challenge the debtor to pay the undisputed portion. The debtor generally won’t pay it but wants to hold the hold account as “hostage” until the matter is fully resolved. However, at least you are keeping your issues down to a minimum and you know that the bottom line is only $1,000.00 out of the whole account is actually disputed.
Your second goal then is to determine exactly what the dispute is relating to that $1,000.00. Determine if it is a particular invoice number or a particular shipment or whatever. Narrow it down to an identifiable quantity.
Third, find out exactly what the debtor is objecting to. Is he claiming it was late delivery so that he couldn’t sell the goods? Is he claiming the goods were defective? How to handle these particular objections (and more) is really the subject of this teleseminar and will be dealt with.
Finally, assuming that the debtor wants to hold the whole account as “hostage” until the disputed portion is resolved, you can go in one of two directions. First, you can see if the client is willing to concede or give away the disputed portion. If the client will credit the $1,000.00, then the debtor has to pay the other $1,500.00 which is undisputed, correct? Now, you don’t want to take advantage of your client or “sell your client down the river” so you have to be careful as to when and where that strategy is used.
The other strategy which is a problem solving strategy is to take the information from the debtor back to the client and find out exactly what the client’s reply is. Once you have the client’s information, you can deal with the debtor again. If the debtor keeps changing his story, you can assume that he is lying. If the debtor, however, is consistent in the story as to what he believes happened, then make sure your client is also clear.
Once you have both sides of the story, you are in the best position to try and resolve the account. If the parties don’t agree at all as to what happened, then it is probably time to settle the disputed portion of the claim. By that I mean, you might just have to recommend an arbitrary figure, like 50% of the amount owed (again, just of the disputed portion) to resolve it. In my scenario, if the full claim is for $2,500.00, and the disputed portion of the claim is $1,000.00, then the $1,000.00 dispute perhaps should be resolved for $500.00 or thereabouts if the parties simply can’t come to terms. Even if the client splits the difference on the disputed portion, the debtor should still pay a total of the $1,500.00 non disputed portion plus the $500.00 settlement for a total of $2,000.00 out of $2,500.00. That’s not bad. You’ve done a good days work if you pull that off in most instances. Don’t expect a pat on the back from the client because they aren’t happy no matter what you do if you collect anything less than full payment but you know you’ve done a good job.
You have to know something about the law in order to negotiate the settlements. That’s the purpose of this teleseminar. You are at a weak spot if you can’t make a strong statement to your debtor as to what the law is. You are also unable to deal with your own client unless you can make a strong statement of what the law is. As I point out in this teleseminar, sometimes the client is wrong and they just don’t want to face it. Sometimes the client has the law against them and they just don’t want to face that. You can salvage a good settlement and keep a good relationship with your client in most instances if you just point out, in a sympathetic fashion that while you would like to agree with your client’s position, the law isn’t always helpful and sometimes it’s not even always logical. By doing this, your client has the “legal system” to blame and not you in the client’s effort to justify taking a settlement of less than the full amount. This strategy will become clearer when we talk about the individual debtor objections.