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

Dear Thea,
How do you handle the influx of business due to natural disasters? I am being inundated with new credit applications and pleas from my salespeople to open these accounts. Once I do open them, they blow out the credit line I have set and push for additional credit. These accounts make me extremely uncomfortable. What should I do.
Signed, Disaster-Shy in Durango

Dear Shy,
Ahhhh, natural disasters: The unpleasant and horrific events that bring out all the interesting people from God's junk drawer as people work to rebuild and restore an abused area. To quote Shakespeare, "Misery acquaints a man with strange bedfellows". But in our case it's a credit manager and random, unknown contracting companies.

What I believe you are referring to here is what is commonly known as "the Storm Chaser." It sounds so much more dashing and gallant then it actually is. Basically, the Storm Chaser is a company—typically involved in roofing, but certainly not limited to that product category—that follows any hurricane or tornado that has left devastation in its wake.

Storm Chasers as a whole have a questionable reputation. Yes, I am generalizing, so before my inbox gets flooded with nastygrams I am aware this is a stereotype. But I would like to remind everyone that stereotypes exist for a reason.

I am a relationship kind of credit manager, so the Storm-Chaser comes across a little sketchy. They’re the equivalent of the circus coming to town with all the bells and whistles and leaving just as quickly. Not to say that is bad, just that the business model is "hit it and quit it." As a result, you should handle these accounts slightly, but not much, different then how you process any other account.

Do your due diligence up front:

  1. Get a completed credit application. Completed means all the lines filled out, principal information, where the main office is located, and where are they incorporated or where the principals live if not incorporated.
  2. Make sure you have a complete credit file. This means business credit report, trade references, and bank reference.
  3. Check with the Secretary of State to make sure you know where the Storm Chaser is based.

Check to see if they have any lawsuits, judgment liens, and mechanics liens. Do they have state or federal tax liens that show a road map of where they have been, or Better Business Bureau complaints?

Most important of all: Have a discussion with them. Ask where they have done business. If they are legit, they will have no problem discussing their business model. Ask questions about their internal structure for entering into business in that state. Are they prepared to obtain the licenses, if any, needed in that state? Have they set up the internal structure to do business in the state the disaster is in? Sure people lie, but if you ask the questions and then listen to the how they answer, you can usually pick up clues if they are blowing smoke up your skirt or are truly in business.

Set a credit line the same way you would any other. If they need more, approach the same way you do any other line. Offer them options.

  1. Pay down the line to be able to release additional funds
  2. Obtain a bank letter of credit
  3. Put up additional security (property, etc)

Go back to the conversational aspect of this relationship. If the customer has made one payment or no payment at all and is pushing for increases in the credit line, call them and have a heart-to-heart. What else can you learn about the company that may entice you to give them that increase? Explain your perspective. Say to them: “If I am the one doing all the giving with no comfort level, how is this a good business relationship?”

Keep in mind that you are not going to make everyone happy. You are the gatekeeper, the watcher of the cashflow. And never overlook the gut check factor. If you feel in your gut that it is the wrong thing to do, follow your gut.

Storms come and storms go. Don't short-change your loyal bread-and-butter customers for a fast talking, quick sale. If the Storm Chaser is legit, they will be someone you have a solid relationship with. They may need you for a trade reference once they ease on down the road. Just because Shakespeare said it doesn't mean you have to climb into bed with them.