Dealing With the High Maintenance Customer: Credit, Financial and Legal Issues for the Credit Team

The high maintenance customer (HMC) has led some suppliers to reevaluate the profitability of the trade relationship, especially the resources the credit team devotes to reconcile the account.  Whether the customer has unjustifiably disputed invoices, taken unauthorized discounts, taken unearned deductions, unilaterally changed terms or simply refused to pay.  In response, some credit teams are quick to put the customer on credit hold or even recommend "customer divorce", thereby devoting more attention to customers paying according to terms. However, for many suppliers, even those selling in a competitive niche with narrow profit margins,  there may be a more effective strategy to manage the HMC than "customer divorce." In this webcast, Mark Speiser, Director of Credit for Archer Daniels Midland Company, and I will discuss:

  • Traditional Credit Management Approach (Gatekeeper) versus Modern Approach (Relationship Preserver) with HMC
    o Who has the leverage in the trade relationship?
    o Punitive or accommodate response?
    o The voice of the sale's team
    o Reconciling the account under traditional and modern credit approaches
    o Robinson Patman antitrust considerations  
  • Customer Divorce
    o Should supplier divorce HMC or preserve the trade relationship?
    o Dropping the HMC may raise revenue and reduce expense
    o Economic conditions may force some credit teams to preserve relationships
  • Industry Information on HMC's
    o Warning signs of delinquencies
    o Social media and other non-traditional sources of information to measure credit risk
  • Opportunities to Revisit A/R Portfolio and Credit Policies
    o Examine traditional signs of HMC defaults and credit policy
    o Is credit policy too restrictive or too liberal?
  • Preserving the HMC Through Contract and Credit Enhancements
    o Credit application T&C's
    o Personal guarantees
    o Additional customer financial information
    o Credit insurance
    o Alternative payment methods
  • Dealing With Past Due Invoices, Yet Maintaining Sales
    o Repayment agreements
    o Fixing indebtedness and waiving claims
    o Collateral pledge
    o Dealing with a customer's insolvency

The webcast is Thursday, November 15, 2018 at 11:00 a.m. pst/ 2:00 p.m. est for 60 minutes.

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Scott Blakeley, Esq.
Blakeley LLP
18500 Von Karman Ave, 5th Floor
Irvine, California 92612
V. (949) 260-0611 / F. (949) 260-0613 /