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 [email protected]

Dear Thea,
I have been a credit manager for years. I have always relied on bank and trade references in evaluating new credit applications, customer credit line increases, or customer credit line reviews. Over the years, it has become increasingly difficult to obtain references. Banks want to charge a fee and trade references, when you can get them, are taking much longer to reply. I rely on this information to make decisions. Why are my fellow credit managers slow to respond or skipping it altogether?
Signed, Seeking Support in SoCal

Dear Seeking,Just as no one snowflake ever feels responsible for an avalanche, I don't believe there is one villain in this story. It's a series of contributing factors that have lead to the what feels like an obstacle course to get a good, clear, credit payment history on an new applicant or customer account review.

If only we (credit managers in the building materials industry) were able to command and get the respect a bank loan officer gets. Ah, my life would be heaven. I would be the credit-granting badass of my dreams. But for some bizarre reason I never understand, my customers do not see the credit line I grant them on the same level as that of a bank. Instead, they view it as some right of passage because my sales rep winked and smiled at them.

Sorry, let me brush my personal fantasy away and get back to your query. I don’t believe credit managers are skipping or slow in responding because they don’t care; it is more of a lack of time and resources. Between granting credit, collecting money, and dealing with day-to-day challenges, trying to find time to respond to credit reference request falls to the bottom of the list. Depending on the company you work for, you may find yourself getting a half a dozen or more a day, not including the 2nd or 3rd request faxes or emails. Trying to squeeze it all in is quite the juggling act.

In addition to credit managers (like everyone else) being asked to do more with less resources, here are some other contributing factors:

  1. Time - My day falls into two categories: critical and important. Critical stuff (pending orders, sales rep issues, customers issues, hold screen, collection calls) comes first. Then I can get to the important stuff (reconciliation, customer file reviews, lunch, reports, bathroom breaks, meetings, and of course credit information requests). I need get all of this done, so my “to-do” list changes hourly in order of priority.
  2. Credit reporting bureaus - Back in the day, DNB was the gold standard and they knew it. You reported to them and got your reports there. But, times have changed. DNB now has to compete with Experian business credit, Equifax and Transunion products, as well as CreditSafe, Cortera, and a host of others. I love free enterprise and it does level the cost playing field, but the downside is that now who I pull from is who I report to. All those choices leave questions as to where everyone's data is going. It is all over the board, both in the quality of data and who is reporting to who.
  3. National Association of Credit Managers - I LOVE my NACM peeps, but I don’t love the structure of the organization for credit reports. As I work for a nationwide company, I have to be involved in at least twelve NACM organizations. I have some challenges in finding who is reporting in what part of the country and figuring out if I am getting the data I need. It's still the best organization for gathering data but it's only as good as what is being reported on a consistent basis from companies in my industry.
  4. Banks - The first time I received a notice that my request for a credit rating would be supplied once I paid the $25.00 fee, I hit the roof. The complete tapestry of obscenities is probably still floating in space and I believe it started with something about "those greedy B*&^%%ds." I called the customer, told them their bank wanted to charge me for their credit rating, and asked if they could they help. Sometimes it worked. Sometimes, not so much. Now, fees seem to be the norm.
  5. Outside interference - I struggled with how to word this one. When someone within a company, usually outside the credit department, decides their company should not report their credit to any agency or organization, that is outside interference. This stoppage of information sharing has a crippling factor to the credit-granting community but is outstanding for those applicants whose credit is...let’s just say, “challenged beyond words." What stops a company from sharing information is usually someone thinking credit is using it to increase sales or giving false information. That type of negative, small-minded thinking is what allows serial abusers to continue the cycle of running up accounts and then moving on to the next victim, I mean, distributor.

That captures the major issues. So, how to solve this mystery? One solution would be to share who you report to with those requesting the reference. If you report to three different agencies or organizations list those names on a stamp, stamp that request, and shoot it back. Then, they know where to go for your company.

Some companies have a web address you can visit to pull the credit reference yourself, if you have the customer's account number. I love that idea. It costs money in both time and programming, so it is an investment. But, the savings in man hours and ability to support your customers with their credit history is great.

Another option is to outsource the work. There are companies that will run down the credit checks for you. There is a cost factor; but, in the end it may be cheaper than hiring another person. It depends what your company objectives are.

I still believe in the credit manager network. If you need a reference in a hurry, call a credit buddy at a competitor for a rating. You want to play that card with some judgment. You can't do it all the time or you get labeled as an abuser.

My biggest pet peeve, right after banks charging, is the company that doesn't respond to your requests but sends requests over and expects you to respond. Really? Quid pro quo, punkin’. If you won’t share you can expect the same in kind.

I don’t have an absolute solution. I believe change is constant. As a business, you either grow and evolve, or you snuggle into your little pool of primordial “how we have always done it” goo and go the way of the dinosaur … and you saw what happened to them!