Hi Everyone,
It’s Hector and I hope all of you are now back in the saddle after a very enjoyable holiday season and New Year. Apparently, many of you didn’t waste any time getting on the phone with your past due clients, letting me know about some of the issues you’re having. I received one email from a reader that was quite interesting and is something I’d like to share with you.
The reader is the credit and collection manager at a mid-size tool & die manufacturing company and has been in the position for about ten years. With over 500 active customers, they generally have about 50 that are past due by 30 days, and another 10 or so that are past the 60-day point.
The credit manager had been calling to one customer (located in the same city) who was two months in arrears for some invoices totaling about $10K and had been getting the excuse from the owner that “cash flow was very tight.” The owner kept asking for a little more time. Since this customer had a history of paying late, and eventually always paid the balance due, the credit manager accepted the excuse.
Well, a couple of days before Christmas, the credit manager was at a very expensive restaurant which had a party room in the back near the restrooms. As the credit manager excited the restroom, she peeked into the party room and saw a big sign with her customer’s company name on it wishing all employees a very happy holiday and new year. As she discreetly scanned the room, she noticed the owner towards the back of the room, who she had once met before. The credit manager returned to her table and began to think about what to do.
So, after the first of the year when businesses came back to work, she called her customer to request payment. Again, the owner claimed that cash flow was still very tight but also promised to make payment in full by the end of the month. The credit manager was absolutely conflicted in the moment. Should she mention that she saw him at his own company holiday party or just accept the excuse and see if the payment promise would be kept?
Have you ever been in a conversation with someone and what they mentioned to you was a complete falsehood, but you didn’t challenge it? Perhaps it was at a party or some event where it just was not worth setting the record straight.
Conversely, perhaps there were times that someone stated a bald-faced lie and you needed to call them down on it, making sure to convey that in no way were you going to except being gaslighted.
Then there are all of the situations in between in which you ponder as to whether or not you should say something. I believe the credit manager was in this situation.
On one hand, she was thinking, “If the customer was having such difficult cash flow issues, then why were they spending money at a very expensive restaurant? In essence, living it up on our dime?”
On the other hand, she may have been thinking, “Since the customer made a firm promise to pay the balance at the end of the month, why rock the boat and challenge him?”
Even after all of my years of experience in collections, I would have an equally difficult time making the best judgment call since there are many factors that go into it. The relationship, the annual sales, the payment and collection history, etc. all add up to the complexity of the situation.
So, what would you have done?
Wishing you a great year ahead and one that doesn’t have so many collection gray zones.
Hector
Hector the Collector is a credit collection and human resources advice column by Nancy Seiverd President CMI Credit Mediators Inc. Your thoughts and comments (nseiverd@cmiweb.com) are most welcome!
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