“Ghosting” isn’t just a phenomenon in the dating world. Credit departments are increasingly being ghosted by customers who may be struggling to pay multiple creditors.
In some cases, these “disappearing act” clients were granted credit extensions by businesses. Failure to respond to phone calls, emails and letters in a timely fashion is often a sign a customer’s in over its head and could be about to declare bankruptcy.
The National Association of Credit Management spoke with credit managers during a recent Extra Credit podcast about the problem of ghosting customers and what businesses can do about it. Hint: Sales team members are typically needed to bring clarity to the situation.
Spot the early warning signs of trouble
Are phone calls to a customer who owes going to voicemail? Did the client typically pick up when called in the past? Are email or text message responses from the customer coming a day or two later?
These are telltale signs of a customer that can’t (or won’t) pay and is about to ghost a creditor for good. Once it’s clear that a customer is avoiding contact, Credit and Sales need to quickly touch base and take action.
Seek to speak to the customer in person
Could the customer be dealing with a health or family emergency? Maybe the business got hit by an extreme weather event (hurricane, ice storm, power outage)? Better to get as much info as possible before the decision to send a customer to collections.
One alternative: Send sales people out to visit a customer that’s late to pay. Ask to speak to the client representative in person. The sales person can tell the rep, “[Mike] says he’s called you and left messages but hasn’t heard back. Is there an issue we can help you with?”
Try to get to the root cause of the ghosting. Checking credit bureaus, for example, can provide the clues needed to secure full or partial payment if the customer is filing for bankruptcy.
Conditions change all the time, be prepared
A steady customer that pays on time may not always be so reliable. Credit teams can forecast stormy weather ahead by collecting and reviewing customers’ financial statements.
Statements may show trends, such as negative cash flow. Declining profits on a year-to-year basis, for example, can be used to make credit decisions on a customer.