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'm in sales. One of our customers changed their name but nothing else about the company. (Actually, they didn't change the name but just added "LLC" to the end.) My credit manager says that, as a result, we need a new credit application. Is this really necessary? Everything else about the customer stayed the same. I think the credit manager is being difficult.
Signed, What's New in New Orleans

Dear New:Necessary? Only if you plan to sell them going forward. If you look at sales as a game, then the credit application, with its terms and conditions, are the rules of engagement. And the changing of the name—whether it’s adding, subtracting, or changing the entire name—is one of the biggest rules.

You didn’t mention if the company adding the “LLC” was changing from a sole proprietor or partnership. In any case, the inclusion of “LLC” means they changed the business entity. They would have had to get a new federal tax identification number, completed new business forms, and, if they’re sales tax exempt, they’d need to get that, as well.

The company you sold prior to its “LLC” status no longer exists; it’s now a new and separate legal entity. By continuing to sell the new entity under the old name, even if you do add “LLC” to the old company name you have in your computer, you’re selling a nonexistent company. If push comes to shove and you have to go to court to get paid, this point may become a problem, since you’d be suing a company that no longer exists.

Why? (Wait for it, this is our theme ...) They’re a new entity.

Nothing sucks more than that moment during an argument when you realize you’re wrong. You, my little misguided punkin’, should be realizing you’re wrong at this point. I’m sure the customer mentioned the name change and said, “Nothing has changed; everything is the same. We just added ‘LLC’ to our name.” That inclusion, however, changes the game.

The company may be annoyed that they have to complete a new credit application. I get it—it’s a hassle. It’s the equivalent of moving and having to change your driver’s license, reregister your vehicles, and change your address with the post office. All stuff you’ve done before, redundant and boring as a dirt sandwich, but it’s also necessary and required if you don’t want tickets and want to continue to receive your mail.

As annoyed as your customer may be, try to defuse that irritation by explaining that you want to make sure their account is set up correctly and that they continue to be billed correctly: You’ll need to obtain that new sales tax–exemption certificate. If you present it as a normal course of business, not as an inconvenience, it will go much more smoothly.

OR:

You can ask your friendly neighborhood credit manager to call your customer’s controller, accounts payable person, or office manager and let them handle the details. That gets you out of the middle and the situation handled. If you stop freaking out that your credit manager will offend the customer, you’ll be pleasantly surprised by how it works out.

You’re a team, you and your credit manager. The team concept only works if you tag us in and let us do our share of the work. Don’t be a ball hog: Pass it to us already!