How to get your customers to sit up and beg.(MANAGEMENT)

Step into the shoes of your customer and examine their contact with your credit department. I'm sure they hear from your collectors when they are past due--not a happy experience. And I'll bet they hear from you when they have an order that goes overline--again, a somewhat confrontational interchange. What do these contacts have in common? You are asking for something and giving little.

If you want them to sit up and beg for contact, you'll need to offer them more. There are several specific areas where your experience can bring value that will make them want to engage with your credit department. At the same time your sales department will be happy about this newfound relationship too.

Creditor Relationships

Let's start with a basic premise that most customers don't understand what entertains credit professionals. So here is an immediate opportunity to give them some help. Tell them what is important to your credit decision making. I'm not sure what is on your list, but let them know in specific terms what is important to you. Your list might include regular and timely financial statements, payment according to terms of sale and timely communication of changes in ownership or management. If you belong to an industry trade group, remind your customers that other creditors can see their payment performance with you and you can see how well they treat others.

Understanding Financial Statements

Most business owners don't know how to read a financial statement. You can still be helpful to them, but you need to keep your message simple. I usually start customer presentations with the concept of every dollar of assets requires a dollar of financing. This allows me to talk to them about the importance of working capital management, debt to equity relationship and financing alternatives.

If your customers are privately held businesses, they are generally without the ability to measure themselves against competition. You can help by aggregating customer financial statements that you have on file and create a common-sized balance sheet and income statement against which you can compare an individual customer. This valuable information is best delivered in a private meeting and you should include a short list of specific observations where they need to improve or where they currently lead.