Hi Everyone,
It’s Hector and I hope you had a wonderful New Year!
If you work in credit long enough, you eventually encounter the kind of customer who treats payment terms the way some people treat speed limits, as friendly suggestions rather than actual rules. Recently, a credit manager wrote to me describing a situation that many of you will find painfully familiar. The customer always pays, but not anywhere close to Net 30. Meanwhile, Sales keeps insisting the account is too valuable to challenge, and the collector is stuck trying to bridge two completely different realities.
Here’s the message I received:
Hector, our sales team promised a customer Net 30, but the customer clearly lives in a Net-120 world. Every invoice drifts further and further out, and anytime I ask for a firm commitment date, I get vague promises or excuses. Sales insists we keep shipping “because they’re too important,” but I’m spending more time chasing this account than all my others combined. How do I bring everyone back to reality without being the bad guy?
Let me tell you something; this scenario is practically a rite of passage in credit. The underlying issue isn’t just slow payment. It’s a misalignment of incentives: the sales team aims for revenue, the credit department strives for security, and the customer wants free financing. When these forces collide, you end up with a relationship that feels like a three-dimensional version of tug-of-war.
In situations like this, the first step is clarity. Before you take action, map out what exactly is happening. I recommend documenting:
- Average actual payment days vs. terms
- Trend line: is it getting worse?
- Amount of working capital tied up in the account
- Promises made vs. promises kept
- Impact on order fulfillment or production
When you show hard data instead of your emotions, it becomes much more difficult for Sales or management to dismiss your concerns. Numbers have authority.
Next, initiate a three-way conversation, not a confrontation, between Sales, Credit, and the Customer. Too often, Sales sugarcoats problems and the collector never gets direct access to decision-makers on the customer’s side. A structured discussion helps surface the real reason for the 120-day float. Sometimes it’s legitimate (seasonality, delayed receivables, temporary project constraints). Other times? It’s simply that no one ever enforced terms.
This is where strategy comes in. You don’t need to slam on the brakes, but you do need to reset expectations. Options include:
- Partial order approvals tied to payment progress
- Shorter terms on new orders until the balance normalizes
- A structured payment plan with milestone releases
- Requesting updated financials to reassess risk
- Freezing additional credit until they meet one specific commitment
None of these punish the customer, but instead they protect your company.
Finally, remember that your job isn’t to make everyone happy; it’s to keep the business healthy. Sales will always push for more volume, and customers will always push for more time, but neither of those goals can supersede cash flow. You are the one responsible for safeguarding the asset called “accounts receivable,” and sometimes that requires taking a firm stance, even when others hesitate.
So, when Sales promises Net 30 but the customer lives in Net 120 land, your task is to bring both sides back to the same universe. You do that with facts, structure, and steady communication. There’s no doubt that by setting boundaries today, you will protect profits tomorrow.
Until next time,
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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