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The Downside of Automatic Credit Holds|
What are credit holds really holding up? Are they stopping orders from going out to customers who can't pay for them? Or are they a nuisance interfering with the smooth operation of your order-to-cash process? Too often, contends this credit management veteran, it's the latter. "We had an interesting event about a year ago where a system glitch caused nothing to go on hold from our service departments for over 60 days before we caught it," says this veteran credit exec. "Know what happened? Not a thing." . . . keep reading
Credit on the Front Line: Strategies For Neutralizing Damaging PO Language|
Forget Battle of the Forms, many credit professionals have to first address the "Battle of the Sales." This situation can be present within many industries and it will often confront the credit professionals that work in companies having multiple sales offices, receiving numerous purchase orders from customers. Although these battles are not new, we only need to look back a few years to see how they have mushroomed. In this article, you'll learn:
. . . keep reading
- How this credit exec combats aggressive customer attempts to slip PO language by them
- Four very damaging (to a supplier) purchase order clauses to watch out for;
- Four specific responses that neutralized the damaging clauses;
- The single most important principle that will both ensure and speed up customer acceptance of your changes; and
- One of the simplest and most brilliant responses to an obnoxious PO clause we've ever seen
A Credit Limit Tolerance Level Keeps Orders Moving|
Setting credit limits and then automating the credit hold process can be great for controlling risk and ensuring quality control. But if your credit limit parameters and protocols are too strict, you end up having to manually review a ton of orders that usually end up going through anyway. The system this credit manager developed was initially holding way too many orders that eventually, after manual reviews, were released. The two tweaks he made enabled them to continue to benefit from their automated system and cut out the the manual steps on the vast majority of orders. And their AR metrics continue to improve. . . . keep reading
The Leveraged Buyout Bubble Grows Again|
The good customer struggling with debt and disappearing into bankruptcy after a leveraged buyout has become stock footage in credit managers' nightmares. LBO debt levels in these deals is once again reaching and exceeding pre-Recession highs. Are we approaching another potential blood bath for unsecured creditors? Or, as some experts contend, is the LBO market now different and inherently less risky? . . . keep reading
Unclaimed Property Table: Due Diligence and Dormancy Periods in the United States|
The concepts of both "dormancy period" and "due diligence time frames" are both very important for maintaining sound unclaimed property procedures. You'll need to understand the concepts, have detailed knowledge of states' requirements, and finally, have a procedure in place to keep your compliance procedures on auto-pilot. In this table, we've compiled the dormancy periods (also known as the "abandonment period") for credit memos for all states, as well as the suggested due diligence time frames. . . . keep reading
Credit Today Benchmarking Survey: Learning from Your Own Companies' Extended Terms Requests|
The irony in today's environment of customers seeking - sometimes demanding - extended terms from their suppliers is that often, the companies at which credit departments are having to push back against customers' demands, are also themselves making the same demands of their suppliers. So our survey sought to learn from those who might have insights into their own company's demands for longer terms. What can we learn from them? Where do these demands originate? How often are they demands and how often are they simply requests? What are the reasons why a company might ask for (or demand) longer terms? Were outside consultants involved in these decisions to pay longer? Not surprisingly, many were reluctant to go on the record with some of the answers to this question. . . . keep reading
Credit Today Benchmarking Survey: Proven Responses to Requests for Extended Terms|
Many companies request extended terms to see how far they can push out payables. Simply giving in makes no sense. Even if an important customer demands extended terms, you shouldn't capitulate without a fight. The key is to remember that terms are a component of the pricing equation and therefore any request to extend terms will change that equation. With that in mind, our survey revealed seven key ways you should push back. To learn those seven key strategies as well as some great advice "from the trenches," read on... . . . keep reading
Credit Today Benchmarking Survey: The Consequences of Refusing to Extend Terms When Asked (Demanded?) by Customers|
Our recent benchmarking survey on customer demands for extended terms asked respondents to share the circumstances involved if they actually lost a customer because they said no. Ultimately, the question of saying no or not comes down to the reasonableness of the request and the importance of the customer to your business. In addition, suppliers must also consider the issue of pricing: do you increase your pricing to compensate for the cost of money? Finally, Robinson-Patman Act requirements, which hold that customers of the same class be treated the same, should be considered. To find out more about the circumstances in which a customer is lost when extended terms are not granted, read on. . . . keep reading
A Credit Cardholder Acknowledgment Agreement Can Spare You Some Grief|
It was one of those moments of triumph we so savor as credit professionals. An account totaling nearly $400,000 was overdue by nearly nine months, mainly due to some minor technical disputes. Norman Taylor went to the customer's location accompanied by the salesman. Together they straightened out the dispute and got the customer to agree to pay the full amount. . . . keep reading
One Company's Purchase Order Best Practice List|
Earlier this year on Credit Today's listserv, a question came up about best practices relative to purchase orders. "I've just been asked to draft a deck for best practices surrounding purchase orders -- soup to nuts -- to be used as a job aid for sales/marketing," the inquirer noted. They were seeing invoice payments delayed due to missing or inadequately funded purchase orders and she wanted some help. As is typically the case, another member of the list's "braintrust" shared a well-thought out practice that she'd put together. . . . keep reading
"We're sales and customer relations oriented." We hear that all the time. What we don't hear that much about are collection tactics that are based on deep understandings of individual customer's needs and problems and designed to assist them to the maximum extent that reasonable risk allows. And what we almost never hear about is collectors empowered to use their judgment in employing these tactics. But we heard about them from this company. . . . keep reading
Credit Today Benchmarking Survey: Requests for Extended Terms: The Burden and the Opportunity|
Requests for longer terms by customers is one of the most irksome of issues for many credit execs these days. We set out to learn what's going on in this arena. Learn...
. . . keep reading
- How pervasive the requests for extended terms are
- The extent to which it is increasing (and it is increasing)
- How requests for longer terms are handled
- Which departments have responsibility for approving such requests
- How long typical terms requests are (and the range), and
- What percent of survey respondents report losing customers when declining requests (perhaps the most important finding in the survey!)
Case Study: Missing Out on Reclamation|
Payment for a delivery of a $9,000 order for sugar cones and waffle bowls that Sugar Treats had delivered to Mae's Ice Cream Corner, LLC on August 1 was late, which was no surprise. Mae's had been stretching out Sugar Treat's 30-day terms for the past year. This time, however, the problem would go well beyond stretched-out terms. On September 9 Mae's filed for Chapter 11 bankruptcy, giving Sugar Treats just five days to seek reclamation under the Bankruptcy Law's 45-day rule. Worse yet, Credit Manager Vic Blackburn, recently reduced to a staff of one, was on special assignment assessing a potential acquisition while all of this was going on. An AR clerk had been assigned to handle routine credit approvals in his absence. Anything beyond totally routine issues just piled up on Vic's desk. "Oh, Lord," he muttered to himself when he returned on October 1 and came across the Mae's filing notice. "I think we just had 20 to reclaim after the filing, and we've missed that too." Is Vic right? And, if so, what recourse does he now have? . . . keep reading
Persuading Sales Reps to Ask for Down Payments|
Sometimes perfectly logical steps get left out of credit and collection procedures. And, over the course of time, those incomplete procedures come to seem logical and normal. That happened at this 105-year old company until this credit management professional arrived to set things straight. . . . keep reading
Shipping and Chasing No More|
For the first 70 years of its operations, this company followed the time-honored business model of selling and chasing - aggressively selling and, of necessity, just as aggressively collecting. Then, 10 years ago, there was a radical transition to rigorously professional credit management, and nothing has been the same since. . . . keep reading
NACM Affiliates: A Rundown of Dues, Services, and Easy Links to All|
Eight NACM Affiliates offer Memberships below $300 and one is offering Membership for less than $200! But more important than the dues is what you get for those rates. Here's a rundown of all NACM affiliates, including the services offered, their location, service area, their website and their dues. Do you know what each of the "four core services" are and which are offered at each affiliate? Find out within! . . . keep reading
Credit Card Surcharges and State Laws to the Contrary|
As part of a January 2013 settlement agreement in an antitrust lawsuit against Visa and MasterCard brought by retailers, vendors have been able to charge a surcharge to consumers who choose to pay with a credit card. This surcharge is capped at 4 percent of the purchase price for consumers, but can be any percentage the retailer chooses up to that limit, as long as it does not exceed the merchant rate being paid by the retailer. The same rules apply to B2B vendors. This surcharge only applies to credit cards and not to debit or prepaid cards. Includes a chart detailing which states ban surcharges. . . . keep reading
Achieving Credit's Potential as a Profit Center with a Cash Rebate Program|
Pay within 15 days and receive a 2 percent rebate by the middle of the following month. That's the gist of this company's program for accelerating payments, boosting sales and avoiding all the costly and time consuming effort of dealing with unearned cash discounts. It's been working beautifully for years, and the mystery is why more companies don't use it. . . . keep reading