GPI 101 – Tell your customer when you owe them money before they are forced to ask you.

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When companies do business with their vendors, they normally owe them money on a regular basis.  They expect to receive invoices from the vendors.  They do not expect normally to receive credits.  This is because vendors normally do not owe money to their customers.

The opposite occurs when discussing companies and their customers.  Companies (vendors) bill their customers on a regular basis.  When companies have product returns, this happens when customers are dissatisfied with the products or services and want some or all their money returned or credited (depending upon granted credit terms).  These product returns result in credit memos issued by vendors to their customers (a reduction of the open ongoing debt).

Issue credits immediately; do not haggle.  When you owe your customers money, you can strengthen the relationship by letting them know immediately.  Do not delay with your customers.

Remind them of their credit(s) on account.  Your customers may not realize you owe them money.  Tell them about their credits so they can use them for a purchase, use them to reduce their next payment owed to you or if credits only remain on the account, offer to return those monies to them.

Tell them of the money you owe them quickly and often.  Tell them of their open credits before they make their next payment, but most importantly, tell them before they are forced to ask you.  If you do not tell them, and they have to discover that you owe them money, their attitude towards future business with your firm is forever tainted.  Do not make this mistake.

Send frequent statements to tell your customers all of their credits available.  One courteous and ethical thing you can do for your customers is send them frequent statements so that if they have a credit open and unused, they can apply it to their next payment (reduce their next accounts payable check they send to you).

Circle the credit on the customer’s statement to draw attention to it.  Send them a statement showing this credit amount and tell them to use it up on their next payment.  Do not wait for them to call you to ask for this credit.  Tell them upfront and show them you are a trusted vendor and want to do good business with them.

Offer to send them a copy of the credit.  They may not have it in their accounts payable department so offer to give them their credit memo so they can use it.  Another reason you need to tell vendors about these credits is because their systems may be lacking and they might issue all the monies that are due without taking this credit.  Accounts payable people, many times, do not necessarily get all the paperwork on time.

Tell them about their credits while they still have an open unpaid balance larger than the credit.  Do this for them because you want more business from them.  If they thought they were to receive a credit but never did, you are sending them a very bad message that you may not be trustworthy, something you cannot afford.

Keeping your customer informed about credits builds trust between firms.  Tell them you are a worthwhile company with which to do business.  Call them about open credits.  Do not miss this opportunity to help your customer and demonstrate your integrity.

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