Lesson 1, Topic 1
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5.4. Banking details for securing payment are provided to the debtor and method of payment is agreed

ryanrori January 21, 2021

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Debt backed or secured by collateral to reduce the risk associated with lending. An example would be a mortgage, your house is considered collateral towards the debt. If you default on repayment, the bank seizes your house, sells it and uses the proceeds to pay back the debt.


Elements in the Negotiation Process

“… negotiations commonly follow a four-step path: preparation, information exchange, explicit bargaining, and commitment. … Negotiation is, in short, a kind of universal dance with four stages or steps. And it works best when both parties are experienced dancers.”

Negotiations with delinquent customers can be stressful and difficult. The customer may feel they are on the defensive. The collector may be under pressure to produce certain collection results.

The negotiation process can be divided into three stages or phases:


The pre-negotiation stage entails preparing for your negotiation with the debtor to get his/her repayment as soon as possible. It involves getting all the information you need with regards to the debtor and the account that is overdue and analysing the situation thoroughly.

This stage also entails evaluating your leverage in other words how much influence or control you have over the situation as well as the control or influence of the debtor in the situation. You need to determine what you will do to enhance or increase your level of influence on the debtor. For example the threat of handing the account over for legal collections or blacklisting a person on a credit bureau may give you more leverage to get what you want.

You also need to build rapport with the debtor to determine early on if the debtor will cooperate with you or will be difficult to move to action.

Identify and set goals for your negotiation with your debtor. It gives you a clear guideline of what you want to achieve with your negotiations e.g. “I want to get full payment of the outstanding amount within 7 days.”

Set out a clear negotiation plan i.e. how are you going to ensure that you realise the goals you have identified for the negotiation process with the debtor.


The second stage of the negotiation entails deciding on the logistics of the negotiation process i.e. when are you going to make the call to the debtor to negotiate repayments. You also need to be clear on the offer you are willing to make and accept.

You also need to decide on the tactic you will use. I.e. will you state your case, clearly and completely to get the debtor to understand the severity of the matter or use threats to get the debtor to pay his outstanding debt. Will you set a time limitation on making payment? Will you use requests to get payment? What tactic would you use?

Remember: Intimidation tactics are often ineffective. One should rather make use of persuasion to reach an agreement.


In the closure stage you need to determine how you are going to get a “Promise to Pay (PTP)” from the debtor. You also need to confirm the agreement for payment with the debtor by rephrasing and recording the promise from the debtor.