Professional Debt Collection and the Art of Negotiation

Negotiation with a debtor can be challenging. From finding the right decision maker to leveraging all the necessary arguments, it takes strategy and skill to use negotiation in B2B collection. If you’re still handling collections yourself, it can be hard to understand where to start and what negotiation tactics are best for influencing a debtor to pay. That’s exactly where a professional debt collector excels.

Negotiation in B2B collections

There is an art and science to debt collection. From a pure compliance standpoint, there are many rules that can put your business at risk if they’re not followed correctly. Are you sure your internal team has the specialized skills to do this properly? There are letters to send and certain times to call, legal options to explore, and more. But all these tools and rules mean nothing if you can’t properly negotiate payment for the highest rate of return.

According to Forbes , “Rather than having employees do a job outside their areas of expertise, a debt collection agency may be a more profitable option. Small businesses with limited employees and time may find that collection groups are a more efficient alternative to internal collections.” But why is it that collection firms can pull off what your internal team cannot? Often, a collection firm has access to better tools than most companies that don’t pursue collections as a primary function, but rather as a necessary evil.

Technology aside, there’s one primary asset needed to maximize debt payment: a skilled human negotiator who goes head-to-head with past-due accounts. What negotiation techniques do the best debt collectors use to wrangle your clients into submission (without breaking any laws)?

Here are a few secrets from the collections side of the fence.

Key negotiation techniques you should know

Knowing your negotiation techniques is Debt Collection 101. To level up these skills, you must also know when and how to use them.

Some typical negotiation styles include:

? Confrontation. The negotiator aggressively pursues the bottom line.

??Avoidance. The negotiator backs off, asks questions, and gently guides the client to where they need to go.

??Accommodation. The negotiator creates a bond between the debt collector and debtor with a feeling of “we’re in this together.”

??Compromise. The debt collector and debtor agree to split the difference to ensure at least partial payment.

??Collaboration. The debt collector takes a more creative approach to problem solving with the client’s help.

It’s critical to understand how to adapt your negotiation style to include one or more of these approaches. The best debt collectors understand the clients themselves will dictate your approach. Come in too forcefully with a weak client, and they shut down. Allow an aggressive client to control the conversation, and you lose. The best negotiators take these basic skills to the next step and apply more sophisticated techniques to sustain the business relationship, if desired.

More sophisticated negotiation tactics may include:

??Tactical empathy. The negotiator may display compassion to a debtor with a clear purpose to collect payment.

??Persuasion modes (ethos, logos, pathos). The negotiator may leverage ancient logical and emotional reasoning techniques to persuade.

??Creativity. This is next-level debt collections, moving beyond basic or even advanced techniques to tap into the client’s underlying interests to achieve the goal.

When training debt collections teams, it’s important to focus on negotiation skills. Why? Because if you want to get paid, you must understand the art of negotiation.

Why negotiation matters to your accounts receivables (A/R)

Negotiation can mean the difference between nonpayment, partial, or full payment. It’s that simple. Today, it’s even harder to collect payment from past-due clients on the phone, thanks to call blocking and a plethora of communications channels, such as text messages, email, and online chat, that clients may prefer. Once you actually get the past-due client “on the hook,” a good debt collector understands that they have a short window to make things happen. That’s when negotiation comes in handy.

Negotiation can be as simple as reframing a question. It can also employ a redirect. For example, if a client asks, “What is the minimum payment you’re willing to accept?” the debt collector may respond with a counter: “How short are you from just paying off the balance?” Again, once teams learn the basics of negotiation techniques, the conversation becomes an art form of sorts — a one-on-one between the skilled negotiator and the client. That’s exactly why you need a professional debt collector with the best negotiation skills. If you have past-due A/R, you can’t afford anything less.

Bad debt happens. When it happens to you, reach out to me — The Guy That Gets You Paid — at [email protected] , or give me a call at 866-341-6316.

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Let’s Get You Paid.