Dear Thea:
How can I tell a customer “NO” without losing their business? 

NO. One of the first words you learn as a toddler, but the most dreaded and feared word in your entire sales forces vocabulary.  The answer lies in how you handle it with your approach and the solutions you bring. Unless the customer is completely beyond reason and negative, you can get a solution worked out. 

Here is where you get to exercise your managerial courage. Depending on why you are saying no –either the customer paid tragically late many times over in the none to distance past, is a new applicant with epically bad baggage, or they want an increase in their credit line that can’t be substantiated by any amount of accounting magic—it is all going to feel like peeling a Band-Aid off a wound. The longer you avoid it, dance around it or drag it out, the worse it will be. 

So rip it off. By that I mean gather all your communication and negotiation skills and have a candid conversation with the customer. That does not mean you should be openly hostile or confrontational, like you’re doing them a favor.  

Using the term “deadbeat” or openly laughing out loud at the request is also bad form. Calmly explain exactly what the roadblocks and concerns are. Ask questions specific to the issues, then wait for the answers. Talk it through. The conversation will most definitely start out uncomfortable and difficult for both of you. Keep it calm, factual, straightforward. 

Soften the conversation by showing the customer you still want their business but there is some fence mending that needs done.  This is the part where you present solutions. Offer to do job sheets with the customer. You can use this tool to secure lien rights on the project and give the customer a chance to build or rebuild their reputation that way. 

A small credit line is another option. Give the customer the chance to make good choices with a small line and see how they manage that. Tell the customer what the credit line is and why you are doing this. COD/CIA is a can be a tough sell (no pun intended) but offers an opportunity to rebuild trust. In any of these scenarios, explanation is the key. Your tone is a big deal, as is how you explain the situation.

Your main goal is to find a way to say yes. I did not say that you, or the customer, would like all the options, but they are still options. Limiting the exposure while retaining the customer and building sales is the chief objective. Retaining a customer is easier than finding a new one, but you can’t stay in an abusive relationship.

You can’t always be friends after a bad break up (cue the Taylor Swift “We are never, ever, ever, getting back together” song here). So recognize that some people mistake kindness for weakness and there is just no way to work with them. Chances are they would be your next bad debt.

Financial conversations are always difficult to get started but once they are going yo