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Oct 01 2015
Know When to Hold 'em and Know When to Fold 'em
Shane Norman, CCE, Wheeler Machienry
When making difficult credit decisions the lyrics to a famous song come to mind sung by Kenny Rogers . . . 

He said, "If you're gonna play the game, boy
You gotta learn to play it right

You've got to know when to hold 'em
Know when to fold 'em
Know when to walk away
And know when to run
You never count your money
When you're sittin' at the table
There'll be time enough for counting
When the dealin's done

Every gambler knows
That the secret to survivin'
Is knowin' what to throw away
And knowin' what to keep
'Cause every hand's a winner
And every hand's a loser
And the best that you can hope for is to die
In your sleep"

I resemble the gambler on a regular basis in my job. Making decisions that will keep a customer in business and ideally pay us back in full versus cutting our losses and fighting for every last penny. As with most facets of life, this is much easier said than done. When a customer is behind and struggling - How do we know when to ride it out with them or pull out all the stops? The simple answer is, we don't know. Hindsight makes it is easy to look back and know the answer to this question but certainly not facing forward. Here are some of my thoughts that help me when facing situations like this:

* First and foremost is actually making a decision.  I have heard it said that indecision is actually a decision just not the right one.  Make and take the time to make a decision, this is primarily why you occupy your chair.

* Policy and procedure - with a good policy and procedure, most of the decisions are already made before hand and have the support of the executives and general managers of the company. In this way you only deal with the exceptions to the rule. But again, if you have a methodology defined in your policy and procedures for exceptions - then those become easier as well. With this you don't have to draw the line in the sand. It has already been drawn and your responsibility is to carry out your marching orders.

* Essential to making a good decision is current and relevant information - gather as much as you can. 

     - This should include checking in with the salesman and the respective manager for additional insight to the situation

     - Update Commercial credit reports - what does everyone else say?

     - Get an update from the customers themselves - I like to visit as many distressed customers as possible personally. This helps me to pick up on the vibe of the customer. It is readily apparent if the customer still believes in themselves by the conditions of the office and the demeanor of the staff. If a personal isn't viable - use the phone.

     - When possible - get updated financial statements. If your customer is struggling you will see it, but you can also better determine if this cash crunch is skin deep or much more serious. 

     - Paralysis of Analysis - Whether or not you have a lot of data - don't get so caught up that you can't make a decision. Make the best decision you can with what tools are at your (reasonably quick) disposal - Keep in mind, it isn't prudent to weed the flowerbed with an excavator (don't over think this).

* Put all of these together and make the decision. If it is a particularly large transaction - I will present it to my boss and the respective sales manager. While I am open to feedback and altering the decision or plan - I am primarily looking to gain support and buy-in. If I gain this from my manager and sales-then not only am I "golden" to carry out my decision without question or static, but I up my street cred with them.

* Communicate - A negative surprise is rarely welcome. Overly communicate with sales and the customer about negative situations and decisions.

* As circumstances change, be open to negotiation with your customer and sales but be willing to hold the line if needs be.

I am certainly not perfect and I would like to have a few of my credit decisions to do over again - but it is how I have learned to make better ones going forward. Even taking into consideration these suggestions - we still may not get it right. But, I firmly believe our decisions will lead to improved results. The secret to surviving in the credit field is knowing when to hold 'em and when to fold 'em.