Tag Archives: CREDIT

How to Deal with Customer Excuses

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We all have customers who love to make excuses for why their payment is late. Maybe the check is in the mail or maybe their customers are late paying them. Whatever the reason may be, it can be a tricky situation to deal with. Here are five things to always remember when dealing with these customers.

Try to get specifics

The best way to catch someone in a lie is to simply ask them to provide specifics. If they claim their customers are late on paying, ask how many customers and when are they expected to pay. If they say the check is in the mail, ask when it was mailed or for a tracking number. You do not want to come off aggressive, but forcing them to give you more than a basic excuse may foil their plans.

Listen

Do not dismiss what they are saying just because you believe it is an excuse. Listen to them and try to determine whether their reason is valid or not. In some cases, the check may actually be in the mail or their reason for late payment could be very legitimate. Your goal is to get paid as quickly as possible, not catch them in a lie.

Be Professional


Dealing with a customer who makes excuses can be a frustrating job, but at the end of the day yelling or
getting annoyed with them will accomplish nothing. In fact, losing your composure can actually delay the payment more than it already is.

Put yourself in their shoes

Very few customers enjoy making excuses. They are typically making these excuses because it is their only option. Clearly, you still need to get paid, but it is important to remember that very few customers make excuses because they want to be in this situation.

Give them a way out and agree on a solution.

This may seem like an odd thing to do, but people rarely like to admit they were lying. You are more likely to get what you need if you give them a way to save face. This not only gives you what you want, but it allows your business relationship with your customer to remain on good terms.

Sometimes customers are giving you an excuse because they have no intention of paying. You will figure this out quickly if you listen, maintain your professionalism and agree on a solution. If they fail to follow through on their promises then their actions have given you the answer.

What to do if a customer files for bankruptcy

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As a business owner, you always hope your customers will be financially stable and able to pay. Unfortunately, some customers will end up filing for bankruptcy. This can be a stressful time, especially if it was one of your more important customers. You may be asking yourself “What do I do now?” or “How do I prevent this situation from getting worse?” Here are six steps to take when you are notified that a customer filed for bankruptcy.

1. Arrange for all goods in transit to not be delivered

Depending on how you deliver your product and conduct business this could be as simple as an email or it could involve a more complicated process.

2. Make sure all future shipments are canceled

Again this could be easier said than done, depending on your arrangements.

3. Check to see if you can submit a reclamation notice on already delivered products

4. Determine how much the customer owes and collect all financial documentation to support this claim.

You should begin organizing all financial documents related to this customer in order to be able to provide sound financial proof of the debt owed to your company.

5. File a proof of claim with the bankruptcy court.

There are many important things to note about this. Make sure you include the required supporting documentation with your claim. Make sure you send the proof of claim by registered mail, with a return receipt requested. You should contact the court to make sure the documents were received after an appropriate amount of time. It is always a good idea to keep duplicate copies of all documents in a secure place in case the court misplaces the originals

Bankruptcy can be a pain to deal with but if you are proactive you can save yourself time and money later down the line. It may seem confusing at first, but the situation will only get worse the longer you wait to deal with it. As always, if you have any questions or concerns contact a lawyer.

4 Steps to Successfully Extending Credit

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As a business owner, you know how your Accounts Receivable impacts your bottom line.

Not every industry is the same but traditional estimates suggest that for every dollar you have as a “non-performing” asset, you’d need to bring in three dollars in new sales to offset its effect. Given that economic times are tough right now, it’s possible that your sales efforts may not be generating the results they used to. Between that and a tight credit market you may find it tough to expand your business or even stay afloat.

It’s often said, “A loan well made is 90% collected”. Success in A/R starts with a solid credit extension policy. Follow these 4 steps as a foundation:

1. REQUIRE a Credit Application: As you know, credit applications are used to help determine the credit worthiness of the applicant.

2. VERIFY through processing: For a Credit App to be useful, the information must be verified. Through processing you’ll want to confirm the corporate identity, contact vendors and request references. You may even consider pulling a credit report on the principals of the company. If you can’t verify any point on the credit app, discuss it with your potential customer. If he’s not willing to wait while you process the application, this may be a red flag.

3. EVALUATE the credit: If the results of processing lead you to extend credit, we advise keeping the terms short initially. As your client builds a payment history with you, you can lengthen the terms. If you are feeling uncertain of extending terms to your potential customer but you still want to do business, consider requesting a ‘personal guarantee’. It will obligate the individual as well as the company for repayment of the debt. If your potential customer is unwilling to personally guarantee the account in exchange for credit, you may want to reconsider doing business with them.

4. REQUIRE down payments: This is a great way to secure yourself when extending terms. If you can get enough money up front to cover any costs or capital outlay, you will minimize the damage done should the account go bad. Determine what your cost is and then try to secure at least that much as a down payment. This way, your customer has vested interest and is more likely to follow through with payment-in-full.

Follow these steps for a solid credit extension policy.