As many businesses in Houston, Florida, Puerto Rico, and throughout the Gulf Coast begin to rebuild after the devastating string of hurricanes that rocked the region, we want to wish everyone a safe and speedy recovery. As credit professionals though, we hope to offer some advice to those of you who have had customers affected by the storms or any future natural disaster. Almost overnight, some of your best customers may have lost whole stores or a large percentage of their inventory. With many of their own customers displaced or focused on recovery, they may also find it difficult to keep up their typical sales numbers.
Be flexible on due dates
If it is at all possible, you should look into extending due dates while your customers take stock of their situation and attempt to rebuild. We understand you are running a business and thus need to get paid, but showing compassion and understanding will go a long way towards increasing customer loyalty in the long run. In many cases, your customers may be waiting on insurance payouts that can take awhile to receive. If this is the case, ask your customers to be as transparent as possible and that you are willing work with them to create a plan that works for both of you.
Helping with the rebuilding effort
If your customers suffered substantial flooding or lost power for an extended period of time, they may have also lost large amounts of inventory. This means their initial orders, once they are back on their feet, will be larger than normal. Due to this large order size, they may not be able to pay under the same credit terms. Due to this unique circumstance, we recommend plans that have an initial grace period in order to allow time for your customers to sell this new inventory. After this initial period, payments can resume as normal, but you should be careful not to overburden your customers with huge payments too soon. Smaller payments over a slightly longer time frame is preferable.
It is important to look at the long run effect of your actions during this situation. Being kind and considerate during these difficult times can pay dividends down the line. Your customers will be far more loyal if they know you are there for them and are willing to work with them during hard times. Part of being a good credit professional is understanding the situation and being able to work with changing circumstances.