That is Not the Way This Works – Michael Dennis, CBF

Now not Later

On numerous occasions, delinquent debtors have given me this ultimatum in connection with payment of their past due balance.   “We are not going to discuss payment status until and unless you release the orders you have on credit hold.”  Often, credit department employees are so surprised by this tactic that they are at a loss for words.  After several incidents, I developed a standard response along these lines:

My reply:  I suggest we start this discussion all over again, only this time without the threat of non-payment.  That is not the way this process works.  Your account is past due.  Our decision to extend credit to your company is based on trust.  We trusted that when we extended credit and shipped product to your company that invoices would be paid when they became due.  Now, you are threatening not to pay these past due invoices unless I agree to release the orders on credit hold. This does not inspire trust, but you are demanding I trust you by shipping additional products on open account terms. 

As you know, orders are on hold because your account is past due.  You can start to re-establish credibility by issuing an immediate payment for the past due balance, but without the threat and the preconditions.  When I receive that payment, I will review the status of your orders pending.  What I cannot do is allow you to use the threat of non-payment to get orders released.  This is not the way that business partners treat each other, and to be completely honest, no one likes to be threatened.  So, let’s start again.

Michael Dennis, MBA, CBF, LCM

In my opinion, it is a very serious mistake to allow any debtor to use extortion to get orders on hold released.  It is a poor precedence to set for future interactions with that debtor.

Those are my thoughts.  What do you think?

Michael Dennis’ Covering Credit Commentary. Michael’s website is

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.

8 Replies to “That is Not the Way This Works – Michael Dennis, CBF”

  1. Wow, this is not a situtation that I have encountered yet! I think that your suggestion to offer the option of beginning the conversation again may be the best way to handle this type of caller. However I know that I would not appreciate being threatened and would not be as lax with this customer as with others who are willing to work on establishing their credit after a difficult time.

  2. I agree with the content of your message, but seriously doubt that my customers would listen to the entire thing. I usually just tell them, “I’m very sorry, but until we’ve reached a resolution regarding your past-due balance, we cannot move forward with new orders.” I repeat this message in various ways, until they accept that the answer isn’t going to change.

  3. The customers attempt to use a bullying tactic that works well on a sales dept, but not as much with a credit dept. Unfortunately some get caught off guard and cave to this kind of bad behavior which encourages the debtor to keep using it as an effective tool. (you give them all the leverage because you need/fear them more than they need you).
    For me, Silence…. followed by a calm response placing the responsibility back on the debtor to come up with a plan so I can see about releasing the order is usually successful. If the debtor continues the tantrum, I offer to call them back later.

  4. Theresa, I agree with your comment that it would be hard to get through the entire presentation… and there are shortcuts. However, I think it is a good idea to at least suggest starting the conversation over again but without the threat.

    I also like your approach of repeating the same thing over until they start listening. One of my favorite ‘repeats’ used to be: Again, I am sorry you disagree but your company does not qualify for (open account terms) or (a higher credit limit) at this time based on our company’s credit granting criteria.

  5. One approach would be to remove the emotionality from the response and treat it only as their opening offer subject to back and forth negotiation. You then simply reply that their proposal is unacceptable and you make a counter-offer. They expect an entirely differerent reaction, probably one tinged with fear and surprise that will negatively impact your thinking. Do not play that game. They want to control the situation. You must focus the discussion on how you want it to proceed and the goal.

    You might response quite calmly: I’m sorry but we can’t agree to your proposal. Instead of your offer, we propose that you pay everything that is owed, past due and current and the new order will be shipped COD. Obviously, they will vehemently disagree. Then you ask them how they can improve on their first offer. From there you slowly work your way down to paying all past dues or whatever is acceptable. You maintain dialogue and move from absurdity to, hopefully some realistic middle ground.

  6. My favorite repeat comment is: “Sorry, that does not work for us.” Here are a couple of examples:

    Payment is schedule in 2 weeks. Answer: Sorry, that does not work for us.

    We can return merchandise to repay part of the past due balance. Answer: Sorry, that does not work for us.

    We have a serious cash flow problem and cannot pay the past due balance but will pay for new orders on a COD basis. Answer: Sorry, that does not work for us.

    Only the CFO can make that commitment. I will get back to you by the end of the week with an update: Answer: Sorry, that does not work for us.

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