Sunday, March 14, 2010

Now you’ve taken an order but your supplier does not want to extend a credit line.

Bilfinger Berger 2009 Earnings

This is one of the more frustrating things that you can encounter as a business owner. You or your sales person has gone out and “won the battle” by bringing back a good sized order, and now the credit person on the other end of the phone does not want to extend terms or enough credit line to cover the business. The first reaction is to call up and vent on the credit person, but this, as we have discussed earlier, is not in your company’s long term best interest. The first question many business owners want to ask is “why,” but it is probably more important to ask “who.”

Why is a question that leads to debate and confrontation while who gives a business owner what he or she might need-more information to get a review or reversal. Was the decision made by a credit manager, senior credit analyst, or accounts receivable clerk? If it was a clerk, they might be following a strict set of guidelines and are not encouraged to think “out of the box.” Same thing for a junior credit analyst, they do not have years of experience to draw on to get the deal done or be experienced enough to offer creative financing. Your first step is to call your liaison with your suppliers company-your sales person. Make sure you get the name of the person making the decision and ask the sales person their job title. Your sales representative should be able to convey how much clout the person making the decision has within their organization. Many sales people (who want the sale) might make a visit back to the credit department for you. A few hours later the deal might show up totally approved! (By the way, even finance people have a heart; I approved a deal that I knew I should not have. The sales rep told me,” Without this deal my kids won’t get Christmas.” What would have you done, probably what I did-approved. Boy was I hating life about March when the company could not pay-the key thing- this deal was approved and it was nothing about business or credit analysis).

If the deal is quashed by a Senior Credit Analyst or Credit Manger who is much respected inside their own company for years of prudent judgment, then make them your ally-ask them to draw on their experience to help you get the deal done. Remember without A/R these people don’t have jobs, so present yourself as a cooperative potential customer needing their expertise. They will begin to like your approach immediately. They might offer to finance half the deal with the other half on American Express. If after 5 deals-paid with in terms, then they will offer a total credit line of x amount. Also ask them if they report to D & B or TRW business reporting, and if they would do this for your company. Most will be glad to help!

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