Question of the Day

By Michael C. Dennis

Question: An applicant is demanding a specific explanation for a decision not to offer that applicant company open account terms.? What am I required to tell them?

Answer:? The response should be firm, professional, and minimize debate while maintaining a good business relationship. Here is a recommended response:

"Our decision was based on our review of available credit information, including trade references, financials (if provided), and credit agency reports. Unfortunately, based on our criteria, we are unable to extend open account terms at this time.”

If the customer insists on a specific reason, your second response could be:

"We evaluated trade payment history, credit scores, and financial data and found that the risk level did not meet our criteria. If circumstances change, we’d be happy to reassess in the future."

Creditors are not required to disclose sources or methods used in credit decisions. Revealing such details could expose proprietary evaluation criteria, invite disputes, or compromise confidentiality agreements with credit reporting agencies and trade references.

Best practices dictate that we Don't share the details about what information we received from what sources, or about how we evaluated, weighed and used that information to make our credit decision.

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