In our last blog, we discussed what credit managers need to know about mediation as a debt recovery solution and why mediation works out to be a win-win solution for both credit managers and debtors. As a follow up to that blog, here we introduce 7 tips that can help credit managers maximise their debt recovery when using mediation as a solution.
- Include a mediation clause in all contracts, terms and conditions as the primary dispute resolution process.
- Approach the debtor and put forth the idea of going for mediation first instead of sending them a legal notice. This shows sincerity on your end in working toward the issues and establishes trust, encouraging greater chances of a quicker payment and settlement.
- If you do not wish to initiate mediation yourself or find that the client is uncooperative, approach a professional mediation agency, such as SHAW Mediation, that can talk to debtors and invite them to participate in mediation. This will help disabuse them of any misconceived or wrong ideas about the mediation process and assist in answering any questions they may have.
- Meet with the mediator prior to the mediation session to explain your situation and discuss any concerns and potential barriers to the settlement. The mediator will not proceed with any joint mediation sessions until everyone is in the right mindset to proceed.
- Collate all relevant documentation prior to meeting the mediator to discuss what information and documentation might be needed to ensure a smooth process.
- Be willing to generate and explore options with the debtor as this improves your chances to recover the debt without having to resort to litigation. You would want to keep in mind that if the case moves to litigation, you might receive a judgement in recovering the debt where the order is only as good as the debtor is able to meet it.
- Know that the final outcome of mediation is a mutually agreed upon solution that can be legally binding, if you wish. This protects your interests by allowing you to take legal action if the debtor defaults on the agreement. However, if the debt is paid, you may not need to go to the expense of legally formalising a past event by way of a Deed.
Overall, mediation is a quick, effective, flexible and cost-efficient solution that could assist credit managers in debt recovery while preserving business relations. This ultimately adds on to the good reputation and builds faith among potential customers in the credit company.
We hope the above tips will be able to help credit managers maximise their debt recovery process. If you have any tips you would like to share, please let us know!