How do you justify a robust travel budget? Can’t you do the same thing with conference calls or Skype? Not really. As this credit management veteran shows there’s nothing quite like personal visits for solving problems with struggling customers and building volume with stronger ones.
For her first 12 years heading up the Chase Plastic Services’ credit operations Debbie Sexton was your typical, office-bound credit manager. But in 2012, when Chase’s management decided the company could benefit from more credit-customer contacts, she was raring to go. And, by 2014, she was making 50 customer visits a year all across the country.
“Initially, travel was targeted at struggling customers,” she says. “We figured face-to-face meetings would help and they certainly did. Then I decided that, since I was out there, I might as well visit other stronger accounts as well”.
“I have a Customer Visit Form I fill out before I visit the customer, listing their recent payment history, ADP, Limit, Terms, etc.,” she continues. “Then there’s a list of questions I need to ask the customer. This form keeps me on task and ensures I get the most out of the meeting. After the meeting I complete the form by adding who I met with, their titles, personal information (children/hobbies) and the goals we developed during the meeting.
“I’ve been able to help some accounts grow with us. As well as enabling me to get to know people, I get to see their facilities and equipment. That helps you know what questions to ask, and your interest wins their appreciation.”
Another major advantage of the visits is that she often gets to see customers’ financials. “They’re almost all private companies so they’re very leery about sharing financials,” she points out. “With the financials, I can dig in further so that I’m more comfortable giving them a higher credit line or better terms. That’s helped accelerate some customers’ growth rates.”
One account she had visited several times was slow pay but not a worry. “But it was always nice to go in and talk with them and continue to build the relationship,” she says. “Then last year they developed cash-flow issues and extended their terms with us. Because of our relationship I was able to bypass the AP person and talk directly with the owner. We got a strong payment plan in place, and I could see that he was very committed to it. He stuck to the plan, got caught up and now they’re doing great”.
Was AP miffed that she had gone around them? “Not at all.” she says. “They were relieved that they didn’t have to be in the middle anymore.”
She has a dedicated credit specialist assigned to monitor certain accounts. When the specialist feels that Sexton should get involved–or when she gets concerned-she calls someone higher up to see what is going on. If she’s met them it’s easier to make that phone call.
Sometimes when customers start running late, it’s because they’ve produced too much inventory or their customers have pushed back their PO shipment dates. This causes our customer to experience some cash flow issues. And some customers may experience a general slowdown in the field, which again can cause cash flow issues.
October tends to be a slow period in certain industries, so she likes to contact customers at that time to see how they’re doing. When they admit that they “might have a bit of a cash flow problem”, she’ll consider working out a payment plan.
Normally she won’t allow open orders to go out without prepayment in these situations. But if she’s gotten to know the customer she may be flexible. “If they’re current on their payment plan I’d release product as long as they don’t go crazy,” she says. “In these cases they don’t need much material because they’re already sitting on inventory.”
Recently there was a high balance with one of their larger customers and there were indications they were struggling. “Management agreed that I should get out there and meet some of the principals so that I could start working with them immediately trying to figure out how to get their AR balance down,” she says.
In this case there were three owners and they recently hired a controller. She had already met one of the owners, and now she met with the other two and the controller.
“They were great people in a bad situation,” she says. “We agreed to hold weekly conference calls, which we did for three months. We talked about payments and what kind of materials they would need, playing it super close and safe until, unfortunately, they had to close their doors. But we had been able to reduce the balance down significantly so that our bad debt write-off was minimal.
“We thought that was a win, even though we did lose some money. We felt that working with them and helping out was the right thing to do.”
DSO has not changed much in the three years since she began travelling (“We’re always on target,” she says.). But bad debts have dropped substantially, something she attributes not so much to tougher credit standards as to the relationships she had developed with customers.
“I’m lucky to have a strong support team in upper management,” she says. “They trust my decision making. It has a lot to do with why they send me out on the road to build rapport with owners.” I also have a strong credit team who backs me up when I’m on the road. I couldn’t travel without my team’s outstanding credit skills or professionalism.
Debbie Sexton
Credit Manager
Office 248-620-2120 x 305