Negotiating with your customer is a good option if there’s something to be gained by continuing to talk to them.
This could be getting them to agree a way to pay some of the money owed to you, or securing future business.
If the relationship with your customer has already completely broken down or you think they can’t actually afford to pay you at all, there is other action you can take.
Negotiation involves discussing the issue with them and trying to reach an agreement. Typically, a discussion would work in situations where there’s a disagreement over:
- whether the work or service was completed as agreed
- whether they can pay you something now, or agree a payment plan, if they’re having financial problems
- the best way to move on and prevent future problems, if you want to continue to work together
If you’re worried about how to bring the issue up, or about doing this negotiation yourself, you can get a mediator to help.
Using a mediator to help you
A professional mediator, agreed on by both of you, can help you to work out a solution.
You can do this before taking other action, or you can pause any legal action you’re taking to mediate.
You can choose when, where and how mediation happens, giving you much more flexibility than, for example, taking someone to court.
The costs of mediation are shared, so you’ll need make sure this is understood and agreed.
A fixed fee can work out cheaper than an hourly rate. In England and Wales, for example, a fixed fee using a mediator listed in the Ministry of Justice online directory is £50 an hour (plus VAT) if you’re owed up to £5000. Fees are higher for larger amounts.
If you’ve already started a money claim, you may be offered mediation for free.
Mediation fees start at
around £50 an hour.
Fees vary depending on:
- the experience of the mediator
- how much you’re owed
Find a mediator
Search for local mediators in:
- England and Wales – use the Ministry of Justice online directory
- Northern Ireland – use the Law Society of Northern Ireland website
- Scotland – use the Scottish Mediation Register
If you’re in England or Wales, you’ll be charged on a fixed-fee basis if you mention that you used the Ministry of Justice online directory. This is cheaper than regular mediation fees.
Everyone listed in the Ministry of Justice directory is registered with the Civil Mediation Council and is a professional, experienced mediator.
Questions to ask
When you first contact a mediator, it’s worth checking:
- how experienced they are, and how successful they’ve been with cases similar to yours
- what the overall costs are likely to be, including fees, venue costs and any other charges
- where the venue for mediation will be
It’s worth talking to a few mediators, to find the one you think is best for you.
If your dispute is about something quite technical or very specific to your profession or industry, you should try to find a mediator who already has knowledge of your sector.
You could also ask if they’re a Civil Mediation Council-registered mediator.
CMC-registered mediators have completed an assessed training course and agreed to be bound by the EU Code of Conduct for Mediators (or another approved code of conduct). They will be insured and have a complaints handling process.
The CMC can also investigate any complaints about registered members that are not resolved.
What happens in a mediation session
Your mediation session will depend on what you want and how the mediator usually works.
You can ask to be in a separate room from your customer (private sessions) or together (joint sessions).
This is usually flexible, but some mediators prefer to always have both people in the same room, so check before you arrange your sessions if this is important to you.
What you get at the end of mediation
It’s up to you and your customer to choose how your agreement will be documented.
You could decide that all you need is a verbal agreement and a handshake, or you could ask for a ‘written settlement agreement’.
The written agreement forms a contract if you’re not involved in legal action. If you’ve started legal action, the written agreement can be signed and sent to the court, who can make it a court order.
You can also include what will happen if one of you breaks the agreement. For example, you can ask for a clause that says everyone must come back to mediation before taking any other action.
How mediation has worked for other small businesses
Read case studies about how mediation has helped other small businesses to:
persuade a customer to negotiate
PROBLEM: A car valeting company was owed fees by a large car dealership. But the dealership claimed that the valeting company owed them for damage to vehicles.
HOW MEDIATION WORKED: The valeting company got a mediator to contact the dealership and persuade them to take part in mediation. The mediation was done by phone, and the valeting company and dealership agreed on a settlement.
agree a payment plan with a customer
PROBLEM: A business was owed £30,000 in fees for recruiting construction workers. The contractor who owed them couldn’t pay the full amount, and disputed the contract terms.
HOW MEDIATION WORKED: A mediator helped them negotiate a payment plan that was affordable for the contractor – they agreed to pay less, but dropped their contract dispute.
renegotiate a contract to keep doing business
PROBLEM: A business was owed for goods they’d supplied to a major manufacturer. The manufacturer, however, said the business owed them for loss of profits because they’d delivered late – and they disagreed over whether this was within the terms of their contract.
HOW MEDIATION WORKED: In mediation, they renegotiated their contract terms. The new terms ensured timely delivery for the manufacturer, and meant that the business could continue supplying them.
These case studies are real examples from CMC-registered mediators.
If mediation doesn’t work
You can still try other ways to get your money back if mediation doesn’t work.
The decision from mediation is not binding, so the business that owes you money may still not pay. You can then choose another way to get what you’re owed.
If you end up taking someone to court, you’ll be expected to show that you tried to sort out your dispute in other ways, so it’s useful to be able to show that you suggested mediation.