As a credit manager, you are regularly faced with a customer who pushes back requiring you to negotiate. The issue could be a disputed open balance, a request for extended terms, or a payment workout when the customer has financial difficulties. Effective negotiation requires advance planning and the use of best practice tactics to reach an acceptable result.

In preparation, try your best to know something about the person you will be negotiating with. What is their style, are they typically reasonable, unreasonable, or aggressive? Taking their style into consideration, as you begin the conversation, try to develop a professional rapport. Focus on the issues, don’t be distracted by false claims, or heightened emotions. Your objective is to reach an agreement satisfactory to both you and the customer, not to create or perpetuate a conflict leading to a failed negotiation.

Consider the following “Four C’s of Negotiation” as you work towards a successful outcome:

1. Caring:

• Show the customer you are prepared with details. Listen to the customers carefully and react to their feedback.
• Be sincere: Do not embellish the facts. Use body language and craft your words to show the customer you really care about an outcome that works for both sides. 
• Be honest, even if your position will be a disappointment to the customer. Avoid unrealistic threats you do not intend to carry out.

2. Calmness: 

• If the customer becomes excited or angry, remain calm. This can bring the emotions down setting the stage for a productive conversation.
• Allow the customer time to state their position and demands. Don’t interrupt, choose your questions carefully.
• As a tactic, you can change from being calm to a more aggressive posture to get a point across. Acting out of character may get a response and give a deadlock a kickstart. This is just a tactic, always remain in control of your emotions.

3. Clarity:

• Confirm: That both you and the customer understand what each is saying. This may be harder than it sounds, but it is essential. 
• Restate: As you go through the discussion, each of you should restate, in your own words, what the other side is saying or asking for. It is easy for two people to hear the same words but interpret them differently. This can be particularly true if emotions are high. It could be that the other side is thinking about what to say next and not really listening. Be sensitive to language barriers. 
• Repeat: If there are differences in understanding, repeat the restatement process until you both have the same understanding. This may take several tries.

4. Comprehensive:

• Be prepared to cover all the issues. If there are time constraints, set up a follow-up time to finish the discussion. 
• Plan out alternative solutions in advance.
• Follow-up in writing. Detail what was agreed to, the remaining issues, and the actions each of you agreed to.
• Meet your commitments on-time. Expect the customer to do the same.

Conclusion: 

Negotiating is an integral part of a Credit Manager’s Day to day role. By following a few useful tactics an impasse can be avoided, enabling a mutually agreeable solution that maximizes your company’s collection results and revenue opportunities.