A while back, Jerry Osborn, CCE, received a call from a long-term, seemingly stable customer. "He wanted to increase his credit line, and it represented the opportunity for some major additional business for us," recalls Osborn, who is credit manager for Hydro Agri N.A., Inc. (Redwood City, Cal.). "I'd met the president before, and I wasn't too concerned about his request."

Editor's Note: This article originally appeared in the Credit & Collection Manager's Letter, which Credit Today purchased in 2006. This article was a Forum column.

Yet, as a matter of policy, Osborn first arranged to visit the customer before granting the increased credit line. "The first thing I noticed when I arrived was that there were very few cars in the parking lot--far fewer than had been there when I had visited previously," he says. Then, while sitting in the lobby waiting to meet with the president, he casually asked the receptionist, "I haven't seen John [the controller] in awhile. How's he doing?"

"Oh, he left three weeks ago," she replied.

"Well, how about Jane [the accounts payable supervisor]?"

"She quit about four weeks ago."

A Chat with the President

Based on these observations and then additional discussions with the president, Osborn ended up cutting back on the customer's credit line, rather than approving an increase. "They're still in business, and they still buy from us, but we hold a short rein," he explains.

Were it not for the visit, Osborn might have easily agreed to increase the customer's credit line (which, it turned out, they wanted because another supplier had cut them off), and the customer might have overextended itself and begun experiencing even more serious problems.

Osborn has been a staunch advocate of customer visits for his almost 20 years in the credit profession. "I started out in commercial banking, and I quickly realized the value of visiting customer sites and developing personal relationships with customers," he explains.

To make sure that he continues the practice, Osborn sets specific goals each quarter and year in terms of the minimum number of customer visits he will make. Who is considered for visits? Virtually everyone, at one time or another:

• Large customers (since exposures are large).

• Small customers (where opportunities for growth exist).

• Prospects (to determine whether to extend credit and, if so, how much).

• Marginal customers (who are experiencing some difficulties).

• Customers who wish to increase their credit lines.

• Customers where chronic problems exist. "For example, if we're having chronic deduction problems, I might meet in person with a customer to review the documents and try to resolve the problem permanently," he says. "There are just some situations that you can't solve by fax or phone."

And, finally, customers where Osborn has an "instinctive feeling" that a visit would be worthwhile.

Preparation

Prior to his visits, Osborn spends a great deal of time in preparation. "I develop as many questions as I can think of, because it's often much easier to get answers when you're sitting across from someone than if you're on the phone," he explains. He wants to take full advantage of the encounter to gather as much information as he possibly can since it may be a year or more before he visits again.

On occasion, Osborn will travel with salespeople, but at times prefers to travel alone. "Some customers are not comfortable discussing their financial situations in front of salespeople," he notes.

During visits, he tries to meet with the CFO, controller, accounts payable supervisor, and accounts payable clerk.

Osborn's most emphatic recommendation when visiting customers: "Focus on being as relaxed and respectful as you possibly can. I find I get a lot more information this way than if I were extremely formal or failed to show respect."

Customer Appreciation

Over the years, Osborn has found that virtually all customers appreciate his visits. "Visits give us the opportunity to place faces to voices and names, and to get to know each other much more personally."

The personal contact also tends to translate into more accessible phone conversations later. "It's usually very easy to reach customers by phone after I've visited," he says. "Were it not for the visits, customers might tend to avoid calls from a credit manager."

Visits also give Osborn the chance to identify new business opportunities for his company. "If I didn't visit some customers, we might not have been able to reap the financial rewards that came with increased business," he says.

Osborn has also found that receivables tend to improve dramatically after visiting customers. "We often get paid when other suppliers do not," he explains. Recently, for example, Osborn received a call from a fellow credit manager who asked if a certain customer owed him any money. "I'd received a very large payment from that customer a while before that, and this credit manager was still fighting to get paid," he reports. "The company had recently been sold, and I'm sure the credit manager will eventually get paid, but because I'd made visits to this company, we were at the top of their pile."

A final incentive to visit customers? "When anyone tells me they don't have the time or money to visit customers, I ask them if they have the time and money to deal with a bankruptcy."

Editor's Note: The above article originally appeared in the Credit & Collection Manager's Letter, a newsletter purchased by Credit Today in 2006. This article originally appeared prior to 2000.