How to Respond to Requests for Extended Dating
By Michael C. Dennis,
Suppose a customer approaches you and requests a six-month
payout on the balance due...with a two-month moratorium in which
no payments will be made. How should you respond? To some extent,
the answer is that it depends on your company's internal policies,
profit margin and financial condition. However, it would seem to
make sense to make the following suggestions in response to this
Ask the debtor for a list of vendors that have
been approached with the same request along with their telephone
Ask for a separate list of creditors that have
agreed to the six-month plan.
Ask if the customer has offered a better deal
to any other creditors.
Ask what caused the cash flow problem.
Ask what they are doing to address the underlying
Ask why they need six months to pay.
Ask if you will be paid interest.
Ask why they do not go to their bank for a loan.
Ask if they are willing to sign a promissory note,
and if not why not.
Consider a counter proposal such as this: No moratorium,
and we want the debt retired in four months, or
Ask for an immediate good faith payment of a substantial
amount of the outstanding debt, or
Insist on a personal guaranty as well as a Promissory
Give serious consideration to refusing to extend
any more to the debtor on open account terms, or
Offer a compromise. Tell the debtor that you cannot
and will not increase your dollar exposure by shipping additional
merchandise on open account terms. However, once the past due
balance has been reduced as they make payments you will consider
offering open account terms such as net 10 days. However, until
the account is paid down you can only sell on terms of wire transfer
in advance [or COD Cash, or even COD Company Check if you feel
this is appropriate].