How many times have you, as a creditor, been faced with the need to communicate an unpopular decision with a debtor? Maybe the decision was to call a loan, go to COD only terms, refuse to extend additional credit or provide additional services until prior billings are paid, decline a loan application, or insist on more restrictive terms. Maybe you have had questions about a company's management and it's ability to sustain profitable operations. Perhaps there have been times when you have suspected the value of pledged collateral had  become insufficient to adequately protect the debt. Perhaps, the problem is as common as deteriorating timeliness in paying from one or more long time customers.

Any of these situations, as well as others not specifically mentioned can lead to strained relations between creditors and debtors. When relations become strained, effective communication often becomes difficult. Regardless of the difficulty, business decisions must be stated clearly. And, the decisions and resulting impact must be completely understood by BOTH sides.

In many cases, the creditor can simply call or write the debtor and state its position.  That approach is clearly the most cost effective. Properly done, relationships can be salvaged even if temporarily adverse. However, what happens when the creditor believes things need to be said and the creditor can't say them? Can't happen? Well, what about lender liability issues or similar possible hazards? The creditor has made business decisions designed to minimize either real or potential loss. These decisions must be communicated and acted upon. One traditional approach would be to have the company legal department or outside counsel handle the matter. However, if the problem may be temporary, or if the real or implied threat of litigation is too strong a step under the circumstances, or if the creditor just doesn't want to use it's attorney at this particular point, a good alternate choice might be the use of a third party mediator.

There are advantages to using an "outsider" under strained circumstances particularly when the outsider has substantial experience in understanding not only the extant problem, but the numerous reasons that may cause it. An outsider can shuttle and work to effectively devise a solution that is satisfactory to both sides. Without the a financial interest in the particular transaction(s), the outsider is able to take the emotion out of the case.