Credit managers often receive offers from their sales department to intercede with customers on behalf of the credit department. You should be cautious about such offers because they often delay or complicate communications with the debtor. Problems can occur when the salesperson represents the credit department in making a collection call because:

• Resolution of the problem is often dependent on the salesperson's appointment and travel schedule, and their ever changing priorities
• The salesperson may agree to an arrangement or a compromise--such as a protracted payout plan--that the credit manager could not or would not have accepted.
• The salesperson may make an honest mistake and miscommunicate your message to the debtor.
• The salesperson may communicate the text of your message, but fail to convey the sense of urgency the credit department has about resolving the problem. As a result, the customer may misunderstand or misjudge the credit department's expectations and intentions if the delinquent balance is not repaid in a reasonable time frame. This can result in accounts being placed for collection or being sued when such action probably could have been avoided.

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

From the credit manager's perspective, when a salesperson offers to act as an intermediary, the best course of action is to patiently explain that he or she can be most helpful by agreeing to take one or more of the following actions:

• Explaining to you what he or she knows or has heard about changes in the debtor's business that would make it difficult for the customer to pay its creditors on time.
• Confirming that there are no pricing, delivery, or quality problems that would give the customer a reason or excuse not to pay the past-due invoices.
• Introducing you to the decision maker within the debtor organization with the authority to commit to paying the past due balance.

Ask the salesperson to work in parallel with you by suggesting that the salesperson open up a "second front" with the purchasing department to lobby for payment, while you work your way up the chain of command within the accounting organization looking for the same commitment for payment. You might also ask him or her to arrange for a joint meeting or joint conference call with the debtor to discuss the delinquency problem.

Also, make certain the salesperson explains that the customer's open account credit line is in jeopardy if the past due balance is not retired quickly and remind sthe buyer that getting open account credit terms from other suppliers will become increasingly difficult if the debtor ends up being placed for collection by your company or sued over the unpaid balance. Suggest that the salesperson look for a way for the buyer and the debtor company to save face by "extracting" minor concessions from the salesperson in return for immediate payment in full of the past-due balance.

In summary, it is dangerous for the credit manager to trust anyone else to present the credit department's position, concerns, and demands to a customer. There is a high risk that the message will be changed to the point that it is almost unrecognizable. The best solution to this problem is to thank the salesperson for his or her interest and offer of assistance, and to indicate that the matter would be better handled directly by the credit department.

Thanks to:
Michael C. Dennis

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.

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