For years I’ve served as a mediator/arbitrator for ADR/Equimar, a fine alternate dispute resolution service located in Boston.
Some collection cases, particularly where there is a dispute over performance, are perfectly suited for mediation – which can serve as a very cost effective alternative to litigation. I’m surprised that companies don’t do a lot more of it. At any rate, I’m trying to change that.
Here is the text of the press release. I’ll post a link when it is published:
Don’t let outstanding receivables impact your bottom line!
We all know the drill. Your firm gets the nod, and after weeks and months of hard work, makes the sale. Thirty days go by and the check is not “in the mail”. There were problems with the implementation but the contract says: “you buy it you own it”. You’ve solved the problem and still no check. They dig in their heels, and so do you. Six months go by. Your sales team is called in to help with the collection effort – and now they are working on past sales, rather than prospecting for and closing new ones. Your DSO is going up. Your working capital is negatively impacted. With each passing day your chance of collecting your money diminishes.
Finally you send the matter out to a collection agency that works on a sliding scale – twenty percent if they can settle before suit, up to fifty percent if you go to trial.
Six months go by and you’ve written the matter off. The collection agency refers it to a lawyer who files suit, asks for suit fees and now you wait two years to go to trial. They file a counter claim. You pay for the defense of that hourly. You have lost the client for good – regardless of how good a product you have and how much your client needs it. It is a lose/lose situation.
This is the precise situation that demands mediation. Mediation is a rapid resolution to a problem that is designed to provide satisfaction to both parties.
Jane Woodworth, of the Law Office of Jane T. Woodworth (www.corporatecollections.com) who specializes in commercial collections says that the trick to resolving cases while preserving business relationships is more often romance than hardball. It is essential to figure out what both sides are looking for, which very often is not what they are demanding. When this is done effectively, as in mediation, the case often solves itself.
Mediation also speeds up the process. No lawyers are required. Your company’s collection person can present the case if they want. The goal is to figure out the guts of the dispute and solve it. The seller wants his money; the buyer wants three hours of help off the clock so he can fully understand the product and maximize its effectiveness. The deal is done, with very little cost to either party. It’s a win/win situation.
Mediation is fast, cost effective and results oriented. For some collection matters it is the perfect solution, for both sides of the dispute. It certainly deserves to be in any collector’s bag of tricks!