Conflict in business is inevitable. And, often the best advice is to make sure that you treat business as business in order to prevent problems from accelerating into conflicts.
It doesn’t matter if the conflict is personal — between farming and non-farming heirs — or with a vendor. Many problems can be avoided with a written agreement that details the services to be provided, or the agreed-upon price for a purchase. Failure to do so often results in costly litigation.
Here are four strategies that you can use to minimize conflicts:
1. Secure a written bid on any purchase where the cost exceeds $5,000 or if the specific cost of a piece of equipment or project is not readily identifiable. This helps to prevent misunderstandings.
2. Proceed cautiously when a dispute develops. First, determine if you can live without the services of that vendor. Talk to your peers. Figure out who they use for similar services. Then, when you approach a new prospective vendor, discuss your problem openly and determine in advance what it will take for that prospective vendor to replace the original vendor.
3. Meet face-to-face with the original vendor. Ask him to explain how he arrived at the charges so you can understand why they differ from the verbal estimate. Stress that you want to be fair. Regardless of how the negotiations progress, don’t allow yourself to become angry. When the meeting is over, thank the individual for his time. And if you are successful in reaching an acceptable compromise, cut the vendor a check that day for the difference.
If negotiations are not successful, be sure to end the meeting on cordial terms. Tell the vendor that you will review the facts he has shared and also discuss them with an adviser to determine further action. If the amount of the dispute is large enough, you might want to consider arbitration. An arbitrator listens to the facts of both sides and makes a ruling. If one of the parties fails to comply with that ruling, local courts can enforce the agreement. An appeal of an arbitrator’s decision also is available.
For more information on arbitration, contact the American Arbitration Association at (800) 778-7879
or on the Web at www.adr.org. Another source of
information is the National Arbitration Forum. You can reach the Forum at (800) 474-2371 or on the Web at www.arbitration-forum.com.
4. Make a good-faith effort. If you are unable to reach a solution that you believe is fair, make a good-faith effort to pay the vendor what you think is fair. Include with your check a detailed, written explanation of your position and how you determined the amount being submitted.
Even if you feel that you have not been treated fairly, it may be best to write off the event as experience if the amount is not significant. Remember, litigation is expensive. At the very least, you have gained a valuable lesson that all agreements should be put in writing.
Darrell L. Dunteman is an agricultural financial consultant and accountant in Bushnell, Ill. He also publishes Ag Executive, a monthly agricultural financial newsletter.