Years ago, my manager and long-time mentor talked to me about delivering bad news to customers. His comments were: There is no good way to deliver bad news. However, if you have to tell an applicant they have been rejected for open account terms or tell a customer that they don’t qualify for a higher credit limit, do whatever you can to soften the blow.
His advice was sound… Deliver the bad news as gently as possible. He was fond of telling me to “put on velvet gloves” before making the phone call. His reasoning was also sound: Just because they don’t qualify today doesn’t mean we want to alienate them. Find a way to leave the door open, even if all you can tell them is that you will re-evaluate the decision from time to time, and will flag the file for review in six months.
He was less concerned about telling customers with past due balances that orders were going on production or shipment hold. His rationale was that the customer created the problem for themselves. I think he enjoyed it when a delinquent customer, placed on credit hold, demanded to speak with him. I know he enjoyed it when his manager, the Treasurer, refused to discuss credit holds with customers and immediately transferred calls of this type back to my manager.
The bottom line is this: If managers do not support credit hold decisions, customers quickly learn that the fastest way to get orders released is to demand to speak to the manager. If the credit manager is a soft touch, he or she can quickly find themselves overwhelmed with requests for reconsideration from customers. With this in mind, I think it is important for the manager not to override decisions. This is possible when there is a policy in place that requires collectors to discuss credit holds with the credit manager before implementing them.
There are bound to be differences of opinion about the ideas outlined above. What different policies relating to credit holds work best for your company?
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.