Is our customer's best interest always aligned with our company's best interest?

In a mutually beneficial business relationship serving your customer well will almost always yield outstanding results for your company. But what happens when the credit department is asked to ship on open terms to a customer who doesn't qualify under the credit policy for anything better than prepay terms? What happens when a customer is increasing orders at a high rate while slowing payments to vendors?

As a credit manager, we are often faced with a difficult decision when evaluating marginal accounts, those with poor payment history or accounts that are growing rapidly and pushing up against their assigned credit limit. Your sales team or the customer may not understand how the credit department can be serving the customer's best interest by holding back an order, requiring payment in advance, or denying terms to a new account. However, if the credit team is applying an appropriately crafted credit policy and reducing risk for their company by limiting credit exposure they are also doing what is in the best interest of the customer.

How is that possible? How is it that forcing a customer to prepay is in their best interest? How is it that holding back an order and potentially losing a sale is a benefit to the customer? How can the credit team requiring a pay down on the account that is at their credit limit be in the best interest of that customer? The answer is simple. If you keep that customer from falling past due or incurring too much debt that they aren't able to service, you are serving your customer's best interest.

In certain circumstances, the credit manager needs to make a difficult decision in order to protect their company from potential bad debt losses and perhaps at the same time, protect the customer from buying themselves into insolvency. A credit manager who is fairly and appropriately applying a prudent credit policy can sleep well at night knowing that they are serving their customers well. They can rest easy not just when they say yes and release that new order, but also in knowing that they may be doing the customer a greater service by holding an order and keeping them on track with manageable debt loads which can be paid on time, thereby enabling continued partnership that will allow both the customer and your company to enjoy profitable and mutually beneficial business dealings.