Sometimes I think back to ways that I could have avoided situations that resulted in catastrophes and over the years have found that thinking ahead a few steps can really help avoid conflict, mistrust, and anxiety.
We’ve all heard from our marketing instructors and bosses that the customer is king, and there is certainly nothing we want to do to dissuade a customer from coming into our door.
Sometimes however the customer makes mistakes that we need to address in the back office management of the books. How we address those mistakes can make a difference in how we appear in the customer’s eyes.
Take a certain situation that occurred a good ten years ago. I was asked to consider re-opening a customer that had a spotty payment history with us in prior years. I always felt that the customer meant well, and just because he defaulted on $29,000 in years past (and now wanted to pay it back), that should not necessarily prevent him from opening up a new account as long as he kept things clean on the new account. His primary problem in my opinion was that his talent was running the business and construction jobs, but he tanked miserably when it came to running his office and administering the money.
Over the course of time I obtained a “pocket judgment” and we pounded out some clear guidelines as to the repayment of old debt that I’ll loosely call a “Note”. A new credit application was signed, along with a personal guaranty, and it appeared that we were going to hit the road running with some big jobs coming our way. Things still needed to be kept up on, and that would mean that the customer would need someone to help out in the office.
This customer had hired an office manager some three months earlier, and as we got to know one another, she seemed to really be on the ball. She kept up with her responsibilities and the customer was clearly delighted that he could spend more time in the field working while she held down the office.
We communicated often and well, and for the most part we really got paid rather timely. But after only a short while, we started receiving payments that could not be matched to invoices. Sometimes checks would come in that paid invoices that had already been paid.
I said nothing and created another account for the customer to post the payments to. I also switched off statement printings. Over the course of the next 9 months or so I received around $8,500 in “bonus” payments. This may sound like a lot of money, and it is, but the customer also bought around $200,000 from us in that short period of time.
Since I was already tracking the existing Note, I created another mirror Note that recognized the bonus payments and corresponding payment dates, interest calculations, and so on. At the point where the Note balance was fully paid (with those bonus payments), I called the customer and we chatted.
Instead of informing the customer that his office gal had made several mistakes, I informed him that in recognition of his hard work to reconcile the old balance, and too his diligence in taking care of contemporaneous charges satisfactorily on Net 30 terms, we considered the debt cleared and paid in full.
I did not think it was necessary to share the whole story and instead gave him full credit for every penny that he had paid.
The customer was a loyal customer for many years to come. He never lost faith in his office gal who remains to this day. If she makes an occasional mistake, we address it right away.
There are times when doing the right thing can be done at least a couple of different ways. In this instance I think it was properly handled.
This article was originally published by me on October 5, 2012.
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