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Published:December 19th, 2008 12:22 EST
Credit Officers

Don't Let Credit Officers Call the Shots

By Joel G. Block (Mentor/Columnist)

You might have heard that many of the credit card companies and the home mortgage companies are reducing the lines of their many millions of customers. Millions of credit reduction letters are going out from all manners of companies.

Well, I got such a letter this week. Chevron Oil Company (http://www.chevron.com), using their subsidiary finance company, FleetCor, sent me a letter saying that my corporate account was going to have its limit reduced by 77%. It also said that I must submit a deposit or a personal financial statement with a personal guarantee in order to keep the card; otherwise the account would terminate, effective immediately.

I`ve been a customer of Chevron for 15 years and have had a corporate account with them for that many years. My account is in good standing. And I always pay my bills on time, so the issue is not related to my performance as a customer. The letter was generated by a computer and was sent out, in bulk, to a large number of their customers as Chevron tries to deal with the credit crisis.

I called the 800 number that the form letter directed me to and I spoke to a customer service representative, who was polite but clearly had no authority to make any adjustment to address the situation. I told the woman that I would be happy to sign a personal guarantee to keep the card because there are times when the Chevron card is very important to me. I also indicated that I wanted the limit to be set at the higher number where it had been for the last many years.

She came back to me and said that that would not be possible unless I posted a deposit in the amount that I wanted the credit limit to be. She further said that once I signed the personal guarantee, they would run my personal credit and make a further determination about the amount of credit that I would be allocated " which could be higher or lower than the amount offered in the letter.

So not only did I have to submit a financial statement and a personal guarantee, but they want to see my credit score and then they`ll determine whether I even get to keep the 23% of the credit limit that remains for my account. I asked the woman what would happen if I declined to do anything and she said that effective the date of the letter, my account will close.

I told the woman that my business, obviously, is not that important to Chevron. And, of course, I`m just one of a million business accounts. But there`s an important lesson here: the credit crisis, in and of itself, is reducing business revenue by reducing the number of customers that companies have.

My account will close in a day or two and it will be gone from Chevron forever, and I probably won`t shop at Chevron ever again. But the people who work for me and the other people who carry the cards that I have on my corporate account won`t buy gas and supplies there anymore either. We`re all going to move the business to one of the other major oil companies. It doesn`t matter that much to us because gasoline is a commodity that we can buy anywhere. But imagine the impact, in the end, on Chevron, and all the other companies that are taking such actions.

I`m moving my business to a more customer-friendly company because Chevron refused to honor the solid credit relationship that I`ve had with them for the last 15 years. Some credit officer has made a decision that is going to dramatically affect the business revenue that the company derives. Credit officers all over the country are making decisions which are dramatically reducing the amount of business revenue that are driven by these companies.

Do you see why we are in a deflationary environment? This explains at least part of what causes a contraction in the economy.

So consider if the credit crisis is costing your business revenue. Keep your eyes open and pay attention: is business revenue going down?

What steps can you take from keep your business revenue from going down?

1. Evaluate your customers on a one-by-one basis. Don`t treat them as commodities and treat them with the respect that they deserve.
2. Learn more about the issuance of credit. Call us if you need help with this.
3. Don`t panic and make decisions that you will regret.

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About Joel G. Block, President of Growth-Logic, Inc.
Often dubbed a "Growth Architect" by his clients, Joel Block advises companies on explosive growth strategies by driving revenue and sales. Well known in the capital markets, Joel is a successful entrepreneur, speaker, advisor and faculty member of the iLearningGlobal community. To bring Joel into your company, please visit http://www.joelblock.com or http://www.growth-logic.com. Also, be sure to check out our newest project: a blog to organize the blogs that cover entrepreneurship - http://www.entrepreneur-hub.com. And finally, for film makers: http://www.filmfundingblog.com - our newest project.