There is a widely held belief that if you stand up to a bully, they will back down. In reality, bullies sometimes back down and other times they knock you flat. This is my story about being knocked flat.
I was working with a large retail customer that took unearned cash discounts and other unauthorized deductions. These deductions eventually totaled more than $200,000. My team fully documented why the $200,000+ in deductions were taken in error. After sending this supporting documentation, I scheduled a visit with the customer and met with accounts payable.
The A/P rep told me that she was authorized to settle the matter for 40 cents on the dollar. I responded that I did not have the authority to accept this proposal, since it would involve my company writing off over $100,000 in deductions I proved was owed.
When I returned to the office, I met with my CFO, and he instructed me to send a letter to the customer’s Controller stating their offer was rejected, and indicating that if payment in full was not received within 30 days that we would consider placing the account on credit hold. At that time, my division sold $15 million a month to this customer. The debtor company’s Controller responded: If you place orders on hold, we will end our relationship with your company – meaning your division and the other divisions of your corporation. This would have meant a loss of about $40 million a month in sales to the corporation that I worked for.
In response, our division President sent a letter of apology. In it, he assured the debtor that orders would not go on credit hold. His letter added that if the offer of 40 cents on the dollar was still available, we would be pleased settle the dispute for that amount. His letter also said the account was being re-assigned to another member of the credit and collection team.
Sometimes you get the bear, and sometimes the bear gets you. Does anyone have a similar experience? If so, did you have a better outcome? What made the difference?
Michael Dennis’ Covering Credit Commentary. Michael’s website is www.coveringcredit.com.
The opinions presented are those of the author. The opinions and recommendations do not necessarily reflect the views of CMA, or their Officers and Directors. Readers are encouraged to evaluate any suggestions or recommendations made, and accept and adopt only those concepts that make sense to them.