It’s frustrating when payment agreements are not upheld but it’s also important to recognize that as a company struggles to make good on the obligation, at least a payment agreement usually shows initial good faith. Here are my thoughts about when adjustments and renegotiations on a payment agreement come into play.
If a customer is straightforward about their circumstances, letting you know what’s happening in advance of not being able to make the next payment, then you probably have no choice but to accept the new, but hopefully still reasonable, reduced payment amount. At least the payments will be coming in, albeit for a longer period of time than you had planned.
If the customer’s business is seasonal, then it might make sense to negotiate for larger payments just after their busy season and reduced ones for the rest of the year.
When a customer is really struggling in a down economy, a company might agree to a payment rate for a set amount of time, three or four months, with the caveat that payment must increase after that point. But if the customer fails to increase payment, then you are back to square one determining if you will allow them to continue with smaller payments or pursue other means of seeking payment.
If you are renegotiating frequently, then it’s time to turn the account over to third party collections and concentrate on those accounts that still have some life to them.
Nancy Seiverd, President, CMI Credit Mediators, Inc.