A Credit Manager’s Role in Resurrecting Dead Deals

In the world of business, a dead deal is a haunting reminder of opportunities lost and partnerships that crumbled before they could flourish. Credit professionals can work closely with the sales team to not only secure sales, but prevent and resurrect so-called dead deals.

Before a Sale Dies

Credit managers can help prevent dead deals and maximize company profits by responding promptly to sales inquiries regarding credit terms, customer creditworthiness and approval processes. This enables the sales team to make informed decisions and move swiftly in negotiations. They also can offer creative credit solutions that align with the customer’s financial situation. This may involve proposing alternative payment terms or credit enhancements to make the deal more appealing.

To help the sales team understand the credit process and its implications, consider these tips:

• Provide ongoing training to bridge any knowledge gaps and promote a cooperative mindset between the two departments.
• Help sales understand the true cost of extended terms, and why it may not always be the best option.
• Maintain open communication with the sales team, exchanging feedback on both successful and lost deals.
• Learn from past experiences can help refine strategies for future sales opportunities.

When working with customers, it’s best to exhaust each strategy before it becomes a dead deal. “I never consider an account dead,” said Martin Smith, CCE, CICP, credit manager at Ash Grove Cement Company (Sumterville, FL). “The customer may choose not to accept the terms but I’m willing to evaluate them to see if there has been a significant change to give me comfort in extending an open line of credit. Everything changes with the business conditions and a properly functioning credit department anticipates these changes and acts accordingly. Know when to hold them, fold them, walk away or run.”

Bringing Deals Back from the Dead

For deals that appear to be lost, credit professionals can assess whether there’s a possibility to renegotiate terms or explore different financial structures that might reignite interest. Resurrection comes in three forms for Kevin Chandler, CCE, director of financial services at Zachry Industrial, Inc. (San Antonio, TX). “One is that the client has decided they want to make changes to a transaction,” he said. “Second is that you decide to move off because your risk profile has changed. Maybe you have a client you’re no longer doing business with that was risky and now this client fits within your overall risk appetite and you’re fine or you decide to take on more risk, which is fine. Or third, both of you decide to resurrect a dead deal.”

Before resurrecting a dead deal, credit professionals must reevaluate their customer and measure their credit risk. “If the customer is not sharing enough financial information, you question the customer’s character, there’s pressure from the sales department on a deal or your gut tells you that something doesn’t seem right, try to write the customer’s story,” Kevin Stinner, CCE, CCRA, credit manager at JR Simplot, Inc. (Loveland, CO), said during a 2023 live Credit Congress session, Trying to Get to Yes—Making the Call When You’re on the Fence. “If a customer doesn’t want to share their financial statement, start by asking specific financial questions to collect that missing data and ask them why they’re in their position so they can get over their financial hurdle.”

Strategies to Close Deals

Creditors can play a pivotal role in collaborating with the sales team to help close deals and ensure a smooth transaction process. “You want to work with the sales department and get involved as quickly as possible,” Chandler said. “The sales team should be contacting you very early in the process to talk about when they consider doing business with a company and divulging any financial information to you. Then, you go from there in the credit investigation. Get the customer’s information and run credit reports. Now, you’re arming your salespeople with sufficient information that can help them in the sales negotiation process. It’s a collaboration.”

Once you have sufficient financial information about your customer, you’re able to negotiate so that both parties are benefiting from the transaction. This can be in the form of customized terms or streamlining the approval process with discounts. “We want a standby letter of credit (LC) upfront all the way to open terms,” Chandler said. “Instead of granting customer payment terms of net 15 days, we give them net 60 days or more. If the customer won’t budge, we use personal guarantees or corporate guarantees in credit applications as layers of security to help secure a transaction. We don’t do discounts, but I’ve been in industries where discounts were done in the past to close a deal.”

Strategies for closing deals or resurrecting dead ones depend on the industry, said Timothy Bastian, ICCE, senior director of corporate risk at Western Oilfields Supply Company dba Rain for Rent (Bakersfield, CA). “The challenge often seen in deals has more to do with the complexity of the projects and risk associated with projects,” Bastian said. “Credit is often involved on the front end because if something goes wrong, they must understand how to get paid. We do have hard redline items that we will not cross when discussing the balance of risk. We have a collaborative strategy, and the bigger issues get a full court press with internal and external experts weighing in on the best approach.” the October 2023 report. CMI archives also may be viewed on NACM’s website.