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.

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