Dispute resolution is becoming an increasing problem for print companies. Here, Philip Thompson, head of BPIF Business, explains what you can do to prevent problems from arising, and how to manage them once they have.
Disputes about the quality and service being provided by companies in the industry are growing. There are various reasons for this, ranging from sales teams promising the earth to get the sale, all the way through to customers trying to get out of the contract by arguing that the quality of the product was not to the expected standard and as such refuse to pay. As a result, many companies in the printing and packaging industry find themselves in a position where an intractable dispute arises. The vast majority of these usually relate to print quality or problems relating to equipment or software and these can be very costly if the dispute has to be settled in court. Sometimes these legal fees are actually greater than the job in the first place.
What’s more, the cost of this course of action is not just financial. The fall out of a dispute can have an even wider ranging impact on your business. This can be with the ending of a relationship with a previously loyal customer to word of mouth, where customers discuss past experiences. This is potentially the most damaging as building up trust and a loyal customer base is often one of the hardest parts of sustaining a successful business. Which is why, finding yourself in the middle of a difficult dispute can seem like your worst nightmare.
So what are the options for the company? The cost has already been generated by producing the product, so this has to be paid for, if not by the customer then by the company itself. This leaves little option but to try and get payment from the customer no matter what the potential fallout and the possible ramifications mentioned above. Is there any real alternative to taking the client to court and incurring the costs of solicitors and other legal fees?
To support companies in this position, BPIF Business provides a dispute resolution service. The association’s print and packaging specialists have extensive experience in providing a range of support, depending on the
circumstances of the dispute. These include short reviews and reports that are quick, unbiased and provide an expert view to enable a printer, packager, print buyer or supplier, to verify their own situation and to understand the risks attached to proceeding or defending a claim. Also included are single party assessments offering a full assessment of the dispute, which may include onsite inspection of products or equipment, or random testing. These along with other services such as single joint party expert reports, expert witness reports, facilitation and mediation are the core elements of the BPIF dispute resolution service.
Here are some pointers to help you if disputes are an issue for your business.
1. Get impartial expert advice
If the company is facing a situation that is heading into dispute, hold off and get some advice (possibly from the BPIF) about mediation first of all. Be aware that if you go to a solicitor you may well be offered mediation services, but it will be solicitor driven mediation, which can often be as expensive as going through the litigation option.
Mediators are required to approach all hearings on an impartial basis and they are trained by The Academy of Experts, the statutory regulating body for mediators. Getting someone who is totally independent of both sides will enable both to talk freely about what the issues are. The cost of the service is often shared between the two parties and can be held at a neutral location. The report that is generated by this meeting solves more than 75% of cases where a dispute is pending. This service is just as effective with small jobs as larger jobs and can often be done in a very short time span of a couple of days or less.
Another advantage of mediation is that it is a non-legal process which avoids the necessity for litigation but at the same time does not compromise the legal rights of the parties to the dispute should the mediation fail.
2. Know your customer
There is very effective credit software available on the market so it’s worth using it. Finding out the credit history of your potential customer will give you at least an indication of who you are dealing with. Make sure you find out about the credit worthiness of a business before you start the production process.
3. Control bad debt
At the BPIF we have found that a company’s debts get to 90 plus days before the finance controller contacts the customer to demand payment. If it is a quality issue, the earlier you start to address this debt the better as you will be able to respond to the customer’s concerns promptly. Alternatively, if it is not a quality issue and the customer is just delaying payment, you are able to act with the confidence that this is not going to result in a possible legal dispute, but it is just down to the customer’s unwillingness to pay. The longer it is left the longer the debt is on your books and having a negative impact on your cashflow.
4. Have a clear pricing structure for your sales staff
As price continues to be the deciding factor for most customers, companies have to have a detailed understanding of what the cost is of the actual job including the full production costs. Sales teams offering unrealistic product quality will just set unrealistic expectations. Good customer relations require comprehensive management of client expectations. The gap between customer expectations and realistic production quality starts at the beginning of the sales process.
5. Develop a thorough customer feedback process
With one off jobs this is not so much of an issue, but if you are trying to develop a relationship with a client, gaining feedback from them is essential. It may be that your clients are very happy with the service that you are providing, however, if you do not actively ask you will not know, which is just a way of burying your head in the sand. Early detection of dissatisfaction will enable you to address the issues and remedy or discuss before patience is lost and the customer turns around and rejects one job, when in fact the feeling of poor service has actually been developing over the course of a number of jobs.
6. Measure the process
By implementing clear processes from the initial sale all the way through production and the final delivery of the product, you will be able to measure each step. This allows you to record where quality issues arise. If done correctly you will be able to highlight problem areas and correct them accordingly. Driving continuous improvement in terms of production will not eliminate errors completely, but by developing efficient and repeatable processes, you will tighten production control, reduce waste and improve quality.
7. Ask for help
Running a business and the responsibilities that go with it need not be shouldered alone. The BPIF offer impartial independent advice. Initial conversations will not cost you anything, but it may help you avoid unnecessary costly intervention.