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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