To prevent late payment turning into non-payment, culminating in lengthy and expensive legal proceedings, certain mistakes are to be avoided. The situation requires understanding and tact, qualities possessed by collectors at Euler Hermes. They appease tension between customers and suppliers when payments are late, and demonstrate the benefits of using an intermediary to maintain good relations.
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To prevent late payment turning into non-payment, culminating in lengthy and expensive legal proceedings, certain mistakes are to be avoided. The situation requires understanding and tact, qualities possessed by collectors at Euler Hermes. They appease tension between customers and suppliers when payments are late, and demonstrate the benefits of using an intermediary to maintain good relations.
How does tension arise when a due date for payment is missed?
What reasons cause customers to be late in making payments?
What kinds of supplier behaviour can exacerbate matters with customers?
If the supplier exerts too much pressure on a customer to obtain payment of an invoice, this is likely to result in a clash. The attitude is understandable, as the supplier needs payments to smooth its own cash flow, but nobody appreciates being put under pressure. Similarly, threatening a customer with legal proceedings is not healthy for a relationship’s long-term future.
Conversely, playing on an emotional connection is no guarantee. The supplier and customer often know each other, which can lead the former to tacitly grant longer payment terms to the latter. The customer can then take advantage of this trust, to prioritise payment of other suppliers with which the relationship is less secure. A customer suffering from several late payments is often tempted to settle the last supplier with which it dealt...
What value does an intermediary add in the settlement of payment problems?
The intermediary has no emotional attachments, and demonstrates openness, listening to the customer to then find an amicable solution. Out-of-court negotiation is preferable, as regards both collecting the money owed and maintaining a commercial relationship. Customers won’t make the same promises to an intermediary as they do to a supplier they know, especially when the intermediary in question is a group of Euler Hermes’ size. Once dialogue starts they understand and appreciate our approach.
It is not unusual for such buyers to subsequently turn to us to handle their own collection issues. They appreciate the help, and ask if it is possible to buy from the supplier again afterwards, which is entirely possible after the dispute is settled.
What leverage does a collector have to recover the money owed?
The ability to listen, educate and instil trust are all factors that smooth dialogue with a late-paying customer. Collectors explains they are there to help find a solution. They therefore explain the position of the supplier who has submitted the overdue payment for them to collect, that they do not intend to act as their customers’ bank. Customers understand these arguments.
Collectors, as a neutral party in the customer’s eyes, can quickly pinpoint the source of the payment problem, and then find a solution that satisfies both sides. If the late payment is the result of a dispute over the order, they collect a description of the shortcomings in question from the customer and the “undisputed” aspects to report this information back to the supplier. If cash flow is the problem, they will suggest rescheduling reasonable proportions. Euler Hermes is in a better position to offer this solution, whereas suppliers are unable to jeopardise their cash flow.