When a customer is up to their credit limit, they may be in need of help.
Quite often, when one of your customers is up to his knees in financial trouble, he’s also up to his chin in embarrassment. As a businessperson, the pressure is tremendous financially and emotionally.
For that reason, many won’t reach out to you in advance of the trouble they see coming. They’re uncomfortable. Embarrassed. And probably hopeful that they can turn things around before the inevitable happens.
Some customers don’t realize that just because they can’t pay the whole amount, doesn’t mean there aren’t alternatives. Hiding seems easier. But you know differently. You know they’re wrong about all of this.
You can show them as a credit professional that there are alternatives and that working on it before it becomes a bigger problem is a great business move!
Set your goals:
- Identifying the source of the problem.
Is it a temporary cash-flow problem or is it more serious? When you talk with your customer, you have to get down to the bones of the matter. Exactly what is the issue? If they’re facing bankruptcy, they may have no desire at all to move forward to fix the problem. They may be too far down the road of defeat leaving you little option but to place that customer on permanent C.O.D. or some other severe limitation. But you really won’t know until you listen to their story.
- Open the doors of dialog.
When you view the customer as the customer and the problem as the problem, you’re establishing yourself as an ally in working this thing out.
There is light at the end of the tunnel. Your job is to help your customer see that. Once they do, you’ll be helping to offer relief by outlining the options for payment. Remember, they want this debt paid as much as you do.
- Offer alternatives.
Circumstances change from customer to customer. Once you’ve established the problem, and that you’re both on the same side trying to solve it, you can then come up with the right options to make it all happen.
For the customer that makes daily purchases, perhaps a daily C.O.D. term will meet the need for a set period of time. A monthly payment plan may be a better fit for the more infrequent customer. Can it be paid off in 6 months? 8? Set that limit and put it in writing.
If the balance is large, it may not be doable to pay it off in 6 months and therefore, a longer payment plan that includes interest rate might be the right gesture. The point is, there are options that are fair to you both. Explore them together to come up with the right plan.