Sunday, June 6, 2010

Paper Wraps Rock

I’ll call it “the problem of the rock”.  A customer has refused to pay and, in doing so, has dropped a dispute in your lap.  That’s the rock – the rock that’s now balancing on your knees.  What happens next?

Sorry to be the bearer of bad tidings, but you can’t just pick up the phone, call your client – whom we’ll call “Mr. Rockmeister” -- and say: "Listen, Rockmeister, you owe what you owe, so pay up!"  That's not going to fly.  No way, no how.

In the previous post, I asked you to look at a customer relations landscape where the client is in the right and the rock is a legitimate objection.  Now, let’s do a 180 and take other position -- the hair-on-fire view.  In this scenario, Mr. Rockmeister is wrong.  Dead wrong.  Wrong in refusing to pay, and wrong in platforming a meritless, malicious or mistaken grumble.  The Rockmeister’s rock exists to break your head, nothing more.

What do you want?  You want to get paid.  And if at all possible, you want to keep the customer, too.  Good plan.  But if you want your plan to work, what you can’t rely on now is a he-said-she-said encounter.  Precious little will be proven by the counterpoint of charge and counter-charge.  No cash will voluntarily change hands in your direction.  If the text of a vendor-client conversation consists of lobbing verbal mortars that say “no, I didn’t” and “oh, yes, you did”, that won’t buy bupkis at the A&P (although it may run up your long-distance bill and raise your blood-pressure commensurately.)

The point I want to make here is that verbal argument has efficacy only when it’s backed up by hardcopy.  Documentation.  Documents with details.  Documents with signatures.  Email strings that serve the same purpose.  It’s all about proof, certainty and what the law allows.  ”Paper wraps rock.”

You’ve heard this said before, I’m sure:

“The race isn’t  always to the swift nor the battle to the strong – but that’s the way to bet.”

I agree.  And I’ll add to it…

If a client is merely blowing smoke, even if it’s only smoke-in-error, then winning the commercial argument is always a better bet when there’s a contractual papertrail to wave around.  That’s the moral and legal highground.

It’s a commercial paradigm.  Sometimes you must have a documentary narrative to get paid.  What does that narrative do?  Well, it “narrates” the commercial tale.  The papertrail supporting a product sale or service order is a way of recounting the history of that transaction.  It’s factual, coherent, tactile and incontrovertible.  Ka-ching!

Suppose you own a newspaper.  You make money by selling ad space.  Assume you’ve run a pricey series of ads on the basis of a verbal agreement with Advertiser X.  But now Advertiser X doesn’t want to pay.  Maybe Ms. X claims that no agreement was ever reached.  Perhaps she says she phoned back and cancelled the order.  Well, who knows for sure?

What’s the problem here?  It’s all talk-talk -- unless you’ve got all your calls taped.

The litmus test of any dispute between supplier and client is what's in the papertrail and what a supplier can prove -- in court, if necessary.  If that supplier has a bulletproof case backed by substantive documentation (eg. a contract or deal memo; fax/email confirmations; shipping, delivery and service sign-offs; invoicing, etc.), then it can go the distance in trying to get paid.

But alas, if the opposite is true -- if the supplier has done the deal on a verbal basis only, has no paper with which to wrap the rock and cannot credibly prove to the customer or a court that said customer has received proper supply or service and now owes precisely what the supplier says is owed -- the end comes pretty quick and nasty.  It’s not a happy end.

The client shuts the money-door, and the vendor is left with no way to open it.  The vendor wins the rock – but that’s about all.

No cash.  No good.

Saturday, June 5, 2010


It’s a contentious world out there.  As any newspaper on any day of the year will amply prove, we are an argumentative, disputatious and litigious lot.  To be human is to agitate and complain.  So it’s not exactly a stupendous newsflash that in the edgy world of business we often fall victim to disagreement.  Do we have to like it?  No.  But there’s no point in sticking our heads in the sand, either.

Conflict is a normal, ubiquitous part of commercial life – and, okay, it’s not much fun.  When a supplier and a customer tumble into a dispute, it’s hard to pretty-up the process.  A pig in lipstick remains a pig -- until we change the channel.  Like any human difference of opinion, the only way to get through a nervy business hassle is to go through it.  How a vendor and a client accomplish this “going” will determine much about the eventual outcome.  If there’s a forum for businesslike discussion and a fast-track for good-faith resolution, a dispute will dissolve quickly.  Supplier-customer harmony will be restored and a stronger business bond may even result.  But if there’s undue argy-bargy, and especially if it’s intemperate and “personal”, the likely result will be corpselike.  “Alas, poor Yorick!”… The commercial relationship will be D.O.A.  Forget the thumping CPR.

No matter the outcome of a vendor-client quarrel, a supplier company with its ears and eyes open will learn a great deal from customer complaints and become a better-managed business because of it.  Unhappy customers with legitimate gripes are canaries in the coal mine of every profit-driven business.  They focus urgent supplier attention on a range of operational shortcomings, whether these concern a product damaged on delivery, a service that didn’t do what it was supposed to do or something as innocuous as incorrect tax coding in an invoice batch.  Ferreting out those pesky procedural glitches with a little intestinal fortitude and a willingness to make amends when in the wrong can create valuable opportunities for company improvement, as well as renovated customer confidence.

Having a bad day in the “Customer Beefs” department?  Think again.  Maybe it’s really a “good” day.  Gotta love those brickbats. They may hurt at first, but they’re all lessons-at-school.  Good lessons, good business education.  Good day.