Negotiating Successfully to Collect Your Cash – Tips Business Professionals Need to Know To Avoid Financial Chaos

Tips Business Professionals Need to Know To Avoid Financial Chaos

Regardless of your profession, if you’re in business, this could happen to you.

  • Clients request services for which they cannot pay.
  • You provide services, and then struggle to obtain payment.
  • Slow payers strangle your cash flow.
  • Payment issues poison your relationships with clients.

It doesn’t have to be that way! The way in which you engage a client relationship at the outset of the relationship, to a great degree, dictates what will occur in the relationship. In addition, it dictates how resolutions will come about when there are payment challenges.

This article delves into some of the aspects that you can control to insure you and your clients do not end up in a negative situation, as the result of their inability to compensate you for your services.

1.)  Know with whom you’re dealing:

A.)  You can avoid financial chaos by not dealing with some people and/or organizations. Just   because someone wants to conduct business with you, doesn’t mean they’re a fit for your business. If they admit to having financial challenges during your initial meeting, you should consider the benefits of doing business with them and the potential hardship that such actions may have on your business.

B.)  Weigh the current financial situation of your business associate and assess the possibility that there may be a future ‘payment’ issue. If it appears that such a situation may loom, install ‘safe guards’ (i.e. collecting more funds up front, keeping the client on a shorter time payment leash, keep a watchful eye on the fact that there may be payment issues associated with the account and pounce the moment such issues become prevalent). In essence, ask yourself if you have the will power, staying power, and firepower (resources) to chase a debtor.

2.  Establish Rapport:

     A.)  Once you’ve assessed the potential risk of a financial default, and you decide to engage in a business relationship with the person, create a mutual relationship built on trust, respect, and the fact that you need to have funds to keep your business running. Set the expectation at the outset of the relationship that you expect your business associate to be a good payer.

B.)  In creating a genuine bond with your client, don’t allow the client’s financial problems to instill financial chaos into your business. In essence, don’t inject empathy into the relationship when the client begins to tell you their financial tales of woe. During such times, you’re setting the course for the relationship and how interactions will occur. Set the stage appropriately.

3.)  Recognize Excuses:

A.)  When some clients are on the verge of experiencing financial challenges, they may begin to hoard resources in an attempt to sustain their own livelihood. It’s at this point that you must become insistent about receiving payment and putting a process in place to monitor future payments. Don’t be caught up in giving more services, with the thought that if you don’t, it will hasten the demise of your client’s operations.

B.)  Discover body language (nonverbal communication) reading techniques. By possessing the ability to read body language, in person and over the phone, you can gain insight into thoughts that a client may not verbally disclose. Such insight will allow you to have a better glimpse into the real situation with which they may be dealing.

4.)  Use Negotiation Strategies:

A.)  You can employ numerous negotiation strategies to counter strategies that a client might present, in addressing his payment situation; the more strategies you’re aware of, and how to use them in the appropriate situation(s), the better positioned you’ll be to thwart the actions of a client that may have funds, but wish to apply them for other purposes.

B.)  Identify points upon which you can apply leverage and avoid financial chaos. As you progress in the relationship with your client, be attuned to opportunities where you may be able to apply points of pressure, should a lack of payment situation make such actions necessary (e.g. if the client doesn’t want everyone to know they have a payment situation, you may consider informing him that it’s your responsibility to report such occurrences).

C.)  Offer a promotion that gives the client a payback bonus (rebate), at the end of a specified period. The rebate becomes effective if the client submits funds, in the manner specified by the agreement (note: this becomes a cost of doing business, which gets incorporated in your overall pricing).

Client relations can be strained when payments issue arise, which could cause your business to incur financial hardships. In order to avoid such situations, choose your clients the way you’d choose your friends. Plus, always keep in mind that a certain amount of business will go bad. Thus, the better you manage the potential for bad clients, the more enhanced your bottom line will become … and everything will be right with the world. Remember, you’re always negotiating.

 The Negotiation Tips Are …

  • Learn to strike a balance between disagreeing and being disagreeable. Try never to create a situation that becomes unmanageable, due to slow or non-payment. Maintain an attitude that conveys the belief that your client will do his best to submit payments on time.  
  • To the degree you can, engage the client as a friend, while maintaining the integrity of the business relationship. If a point occurs when you must discuss a payment situation, personalize yourself and speak from the financial discomfort (use appropriate ‘word(s)’ for your situation) that such an occurrence will have on you and your business.
  • In considering with whom you’ll do business, think about the potential future ramifications of engaging in a business relationship with any entity. In some case, there may be stop signs at the outset.
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