As the calendar turns toward year-end, credit and collection professionals often find themselves in the hot seat. Sales is pushing to close last-minute deals, finance is watching cash flow like a hawk, and leadership is laser-focused on meeting revenue targets. In this crunch time, one issue repeatedly surfaces: whether to allow exceptions to established credit policies for so-called “strategic customers.”
On the surface, the argument seems compelling. Strategic customers are often large, long-standing accounts with significant revenue potential. They may represent a cornerstone of your business or carry reputational weight in the market. When the sales department brings in an order that exceeds the credit limit, or requires relaxed terms, the pressure to say “yes” can feel overwhelming. After all, nobody wants to be accused of blocking growth at the finish line.
Yet, every credit professional knows the danger of bending too far. Allowing exceptions can erode the integrity of your credit policy and create expectations that ripple into future quarters. One “temporary” exception in Q4 often becomes the baseline for negotiations in Q1. Even worse, it opens the door to elevated delinquency risk, particularly if customers themselves are under financial stress. The cost of one large unpaid invoice can dwarf the revenue gains that leadership hoped to achieve.
So how can credit managers strike the right balance? A useful approach is to establish clear guardrails around exceptions. For example:
- Require senior-level approval (CFO or equivalent) for any exception beyond a set threshold.
- Document the rationale for the exception, including projected revenue, customer history, and contingency plans.
- Set expiration dates so exceptions don’t quietly roll into permanent policy.
- Track exception outcomes to evaluate whether they actually created value or simply added risk.
These measures won’t eliminate the pressure, but they ensure that decisions are transparent and defensible. They also shift responsibility from the credit department alone to the broader leadership team, where it belongs.
Ultimately, the goal is to protect the company’s long-term financial health without needlessly jeopardizing important relationships. Credit professionals should position themselves not as obstructionists, but as strategic advisors who understand both the upside and the risk of making exceptions. By presenting clear data on potential losses, showing how exceptions impact DSO or working capital, and reminding management of the true cost of unpaid receivables, credit managers can guide leadership toward smarter, more sustainable decisions.
In the final analysis, Q4 is about finishing strong — but not at the expense of Q1’s stability. Strategic customers may deserve special attention, but they should never be allowed to rewrite the rules on their own. With strong policies, thoughtful exceptions, and clear communication, credit managers can support revenue goals while still holding the line on risk.
Your thoughts and comments (nseiverd@cmiweb.com) are most welcome!
Nancy Seiverd, President
CMI Credit Mediators, Inc.
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