Personal Visits; Advantages and Risks; Costs and Benefits

One technique that can be useful in debt collecting is a personal visit by the credit manager to a delinquent customer. A customer visit is a legitimate tool that can and should be used when necessary to try to collect past due balances more amicably and more quickly.

Personal visits by the credit manager can be difficult and uncomfortable but visits do not need to become confrontational.  Sometimes, the number or the complexity of disputes necessitate a personal visit. An added benefit of personal visits is the fact that the credit manager can assess the customer's business operation for themselves. One advantage the credit department's representative has in face to face meeting is that it far harder for customers to say No in person than it is over the phone.  Additional advantages of personal visits include:

• Visits provide a unique perspective on the business world in which the creditor company competes that cannot be obtained sitting behind a desk at the corporate office,
• Personal visits provide an opportunity for credit professional to build rapport with customers,
• Visits tend to result in faster payments,
• It is easier to request financial statements or other sensitive documents from customers in a face to face meeting and harder for the customer to refuse to share this information.

Personals visits by representatives of the credit department are time consuming and can be expensive. Nevertheless, personal visits can offer the credit department with valuable insights about the customer that are unique in providing additional information about the risks associated with doing business with the company. By remaining observant, by asking a few pointed questions, and by taking brief notes during a personal visit, a credit professional may be able to valuable information including:

• Identifying other creditors extending credit based on the raw material or finished goods inventory you may observe,
• Learning whether the applicant owns or rents their place of business, and for how long they have been at this location,
• Determining how busy the company appears to be, and find out how many people are employed at the location,
• Evaluating how well-managed the debtor company seems to be based on how busy and how organized the employees and the operation appears to be,
• Evaluating the debtor's investment in capital equipment in order to answer these questions:  (a) Is the equipment state-of-the-art, or (b) is it outdated and therefore less efficient,
• Determining whether or not the debtor's production methods seem modern or outdated based on your observations of similar companies in the same industry,
• Considering whether the company's products are in demand, or are falling out of favor,
• Asking about the customer's future plans, goals and their credit requirements,
• Asking for information or insights about the company's problems and prospects,
• Requesting current financial statements.

A visiting credit manager can ease the tension by giving the customer an advance notice of the agenda for the meeting.  Personal visits are sometimes considered provocative or controversial.  They need not be.  Personal visits are a legitimate business tool that should be used when necessary to discuss and resolve past due balances.  In fact, some disputes between debtor and creditor are so complex that a personal visit is the best and only practical way to resolve them.  Personal visits also provide the opportunity for credit professional to develop a professional or even a personal relationship and to build rapport with the customers they visit. 

© 2011 by Michael C. Dennis.  All Rights Reserved.  Michael is a business consultant and the author of "Credit and Collection Handbook."