3JM Company Inc.

Published Articles by David Balovich

Published in: Creditworthy News
Date: 9/7/00

I was recently visiting a client when we were interrupted by a customer's telephone call who was agitated upon learning the amount of credit that had been established for his business. The credit manager patiently explained to the customer that the credit limit had been assigned based on the customer's expected annual purchases and that should the customer place orders that exceeded those expectations the credit limit would be increased to accommodate them. The customer informed the credit manager that they were not aware of that and it was only after their sales representative had informed them of their credit limit that they became upset.

Having satisfied the customer and possibly "saving the account," the credit manager (to my chagrin) picked up the telephone and chastised the salesperson for informing the customer of their credit limit. During this conversation the credit manager blurted out "it is not your place to inform customers of their credit limit." I wholeheartedly agreed with that statement and after they completed the call and at the risk of upsetting a client, communicated my thoughts.

I asked the credit manager that if they had a credit card would they want to know how much credit they had been authorized to charge to the card? Their answer was the expected yes. Then I continued, "what is the difference between a credit card customer knowing their credit limit versus a business who has been provided credit privileges, by their vendor, knowing theirs?"

Shouldn't the customer have a right to not only know that their credit

application has been approved but also the amount they are authorized to

charge to that account? Should it not be the responsibility of the credit department to inform the customer of this information? To suggest, as my client did, that informing the customer of their credit limit could result in the loss of a sale is preposterous. If that be the case then the credit department is not assigning credit limits properly. The purpose of the credit limit should be to control excessive exposure and in certain cases the company will lose sales due to the customers inability or unwillingness to pay bills as they come due. A company should not withhold from the customer information about their credit privileges for fear of losing their business.

Regulation B of the Equal Credit Opportunity Act provides that creditors must inform the applicant of their credit decision within 30 days of receiving a completed application for credit. Although it does not require creditors to inform the applicant of the amount of credit granted, it certainly makes good sense to do so. Why wait until the customer has reached their credit limit and placed orders to inform them that their charge account is at the max? That's when customers not only become agitated but have every right to be.

We can reduce the number of unnecessary irate phone calls we receive from customers by just communicating the facts. Remember, an educated customer has less to complain about then one who is kept uninformed.

Treat the customer the way he wants to be treated!

I wish you well.

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