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We released an order that put a customer over their credit limit by 50 percent – and this is the largest balance due the customer has ever owed my company. The invoices in question came due last week. The customer has promised payment in full by the end of this week. There is nothing unusual about this payment pattern for this customer; the invoices will be paid before they reach 45 days. The customer owes us $150,000 and has another $30,000 order just submitted. I feel like I am in one of those poker tournaments on television. I have asked for immediate payment, and the customer told me they cut checks once a week. In this case, the ‘bet’ is another $30,000 or 20 percent more than I have already extended to the customer. What would you suggest?

Answer: It sounds like you regret making the original credit decision. Even if that is true, I would not suggest you share that information with your customer or your management team. Assuming there is additional information that the customer could provide that would make this decision easier, I would ask for it. I would not tell the customer they are over their credit limit. I would simply say that you need additional information for your file, such as a copy of their financial statements, in order to approve an additional $30,000 over and above the $150,000 currently owed and now past due. On the other hand, if the credit file is current and you are not comfortable with the risk, present the situation to your manager, but remember your position: You are confident about the first $150,000, but you are unsure about the pending $30,000 order.

 
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