Personal Visits

One technique that is useful in collecting involves a personal visit by the credit manager to the delinquent customer. Visits of this type are sometimes tense and controversial, but they do not need to be. Collection visits are not intended to be confrontational. Visits by the credit manager are a legitimate business tool that should be used when necessary to resolve past due balances.

Occasionally, disputes between the buyer and seller are so complex that a personal visit is the best and only practical way to resolve them. An added benefit of personal visits is the fact that the credit manager can assess the customer's business operation for themselves. One additional advantage is the fact that it is far easier for a customer to say no to a payment request on the telephone than it is to refuse to pay the creditor's representative in person.

Additional advantages of personal visits include:

• Visits provide a unique perspective on the business world in which the company competes that cannot be obtained sitting behind a desk at the corporate office.
• Personal visits also provide the opportunity for credit professional to build rapport with customers.
• Visits tend to result in faster payments - at least in the short term.
• It is easier to request financial statements from customers in a face to face meeting and harder for the customer to refuse to share this important 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 being observant and by asking a few pointed questions, a visiting credit manager may be able to valuable information including:

• Identify other creditors extending credit based on the raw material or finished goods inventory you may observe.
• Ask whether the applicant owns or rents their place of business, and for how long they have been at this location.
• Decide how busy the company appears to be, and find out how many people are employed at the location.
• Evaluate how well managed the company seems to be based on how busy and how organized the employees and the operation appears to be.
• Examine or evaluate the company's investment in capital equipment. Is it modern, state-of-the-art, or is it outdated and therefore less efficient.
• Determine whether or not the company's production methods seem modern or outdated based on your observations of similar companies in the same industry.
• Consider whether the company's products are in demand, or are falling out of favor.
• When you talk to the customer, evaluate their knowledge of products, prices, and market conditions.
• Ask about the customer's future plans, goals and their credit requirements.
• Ask for information or insights about the company's problems and prospects.
• Request access to current financial statements.
• Always request new information of importance to a creditor or a potential creditor.

A note of caution: Personal visits remain controversial. Some customers can see them as threatening. The visiting credit manager can ease the tension by giving the customer an advance notice of the agenda for the meeting.

Source: Michael Dennis, author of "Credit and Collection Handbook" available at the NACM Bookstore.