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Some Truths about Credit Management and Debt Collection
by Michael C. Dennis and Dorothy Siegel

  1. The best time to manage risk and control delinquency is when you are evaluating a credit applicant.

  2. Another time to do so is when performing periodic updates on active customers.

  3. The more flexibility you demonstrate when dealing with delinquent customers, the wider you open the door to continued abuse of your company's terms of sale.

  4. Often, the louder a customer protests about not getting the credit limit they want the more likely it is that the customer/applicant has something to hide.

  5. When presenting a payment plan to a delinquent debtor, credit professionals need to emphasize that this is the MOST they can do to help the debtor. If the debtor fails to make even one payment, demand should be made for the entire balance due.

  6. Never re-renegotiate a payment plan. You have already made a huge concession by accepting 'any' extended payment proposal. If a debtor tries to renegotiate this deal, chances are pretty good that you are never going to be paid in full.

  7. Creditors should make it as easy as possible for customers to report problems on invoices [such as shortages or pricing problems] by including a toll free help number on their invoice as well as on the packing slip.

  8. Once you recognize that salespeople are trained to look ahead, it becomes easier to understand why it is so hard to get them to address and resolve problems involving sales and shipments that have already been made.

  9. The fact that you have 'Never lost a penny' selling to a particular customer in the past does not guarantee payment in the future. If past performance were a perfect predictor of future actions, we would all move to Las Vegas and become rich at the Casinos.

  10. Customers have a vested interest in telling no one [especially creditors] they are considering a bankruptcy filing. Why? Because this news could cause a 'run on the bank' in which trade creditors lose confidence and refuse to ship on open account terms.

Dorothy Siegel is a business consultant specializing in helping companies reconcile accounts and reduce balances over 90 days. She can be reached by email at

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