Credit guru Thea Dudley has spent more than 30 years in LBM credit management. Now she's here to answer your credit and collection questions. Got a question for her mailbag? Contact Thea at firstname.lastname@example.org
This letter came to me from a sales rep. I liked it so much and thought its message was so appropriate that all I’ve done is slap “Dear Thea” on the top and check the grammar. I hope you benefit from his words, too.
As a salesman, it is in my nature to view your job as the enemy to my portfolio, the Bad Guy who only speaks to me in times where I cannot sell my customer or have to go collect money. To which my natural instinct tells me that “that isn’t in my job description as all I need to do is sell.” This seems to be the norm, correct? A large portion of the industry would default, as a joke or sincerity, to something close to this outline and state things will never change. I think they are wrong, but I didn't always think that way.
In my early times in the professional world, I was programmed to go with the norm and treat the credit team as the dark hole of the company. Just sell, sell, sell, and let your managers take care of the problems with the bills. It worked for a while. Numbers were good, trucks were loaded, and customers were happy. What I didn’t notice was how I created a massive pit of financial burdens and set myself up for failure to keep the train going. It never dawned on me that we wouldn’t take an order. Especially in the competitive markets of a down economy.
My lesson was learned quickly when I saw the incentive penalties being issued on my monthly bonuses by not having a solid Accounts Receivable in my portfolio. Following that, I had to do the unthinkable to this point in my career and deny orders until invoices were cleared. Then the derailment started to happen.
Customers were angry. Orders dramatically slowed and calls began to get unanswered. I let my customers down in my mind. I failed them by not being there when they needed me to aid in the growth of their company. And then a vice president of our region came up to me and gave me some of the best advice I had ever heard. He told me “…that this is a learning lesson every salesman goes through. You’re not the first person to ever experience this in their career. But moving forward, remember that people buy from people, not companies. With that said, you have to have the company’s overall best interest in mind and not just a price or never saying no. This includes having regular discussions on cleaning up invoices owed in order to promote a healthy credit standing with our company.”
This was great! It made sense from when he spoke it to me and got clearer with our follow-up discussions over the following weeks. I changed my verbal approach to each customer by using our credit team as a resource instead of as a dead end. The credit manager and her team were very excited to hear that they were being used as a sales tool and offered up a ton of assistance, from giving out direct phone numbers to riding along to speak with the customers on the front lines.
A good portion of the customers were receptive after a while and agreed to meet and listen with our credit team. Some of them ran to the competition and never looked back. With what I had though, I knew I had another shot of proving myself as one who can help them grow, keep them in good standing and always have their best interests in mind. An opportunity I was not going to waste.
My biggest victory on this new outlook came in 2012. A contractor reached out to me in a time of need. Everything good, bad, or indifferent about their current state was brought to the table to have full visibility of who they were. Their company’s history was a bit rocky once the housing market crashed but showed a little promise of stability over the most recent 18 months. My credit department researched some more and came forward with our starting point of payment up front for A Type Orders and we would create large job sheets/joint checks for B Type Orders. Customers were hoping for a bit more but agreed in the end.
The first 30 days were monitored with a microscope on every move. Were all parties living up to the agreements made and showing full disclosure on the “checkup” dates? If they were, we would move to the next phase. If not, did we need to start again? Luckily for all, the first 30 days went as planned and some positive growth for the contractor came from our end. They were able to earn a small credit line to grow the A Type Orders and expand more opportunities for B Type Orders.
After six or seven months of routine checkups and agreements being met, the customer hit a point where we couldn’t hold them back any longer. Their credit histories kept growing positively and were able to go out and find more business with our credit team in their back pocket as a tool for their success. And in one documented year, they went from paying for everything upfront to generating over $500,000 in sales with our company. The year after that, they were over $1,000,000 in annual sales! A phenomenal story that I am still glad to say is in existence today.
Since then, my credit teams have been one of the first tools or selling points I mention to new clients. Establishing a strong rapport and trust to use them has only allowed me to find more success with customers and generating the best universal return of investment for my company. It was a tough professional lesson to learn but glad I learned it when I did. Thanks to my VP for the side discussions of a tough lesson learned and thanks to my credit team for making me a well-rounded salesman for my customers and my company.
Atlanta Sales Rep
Dear Atlanta Sales Rep,
Thanks for sharing your story. Credit managers everywhere are getting ready to canonize you for sainthood.