Effectively Manage the Marginal Account

     It would certainly be a miracle if your marginal customers could become credit-worthy overnight.  Don’t hold your breath…it simply won’t happen.

    However, the marginal customer can be a profit generator for your business, while at the same time representing increased risk.  Regardless of how hard you try to justify open account privileges, there always remains that element of doubt about having made the “right” credit decision.  So where do you draw the line before you turn away marginal business, allowing it to become your competitor’s dilemma rather than yours?  The answer is clear:  ”not until you make every effort to “manage” this kind of business.  Conversely, your competitors’ rejects have the potential of becoming your welcome and profitable customers—once you learn how to handle them.

     Dealing with a marginal account is not an easy task.  Frequent communication is a must.  Familiarize yourself with your customer’s business, and more importantly, get the necessary collateral security that enables you to anticipate and respond to problems that impact your customer’s business.  Suggest mutually beneficial ways to remedy problems after you have investigated them and then move forward.  Always listen with an open mind.  Give the benefit of the doubt.  You will win your customer’s loyalty, confidence and appreciation for consistently making this kind of effort.  Your indebted customer will turn into your “captive account”, trusting your judgment and respecting your decisions.

     Doing business with a marginally risky customer will always require a more active involvement of the credit and sales departments.  When a specific credit decision is made, it should be explained to both the customer and salesperson, making certain that everyone is aware of the exact terms and conditions assigned to the transaction.  Many disputes about payment can be eliminated if everyone involved remains informed.