“LBM Talks” hosts top professionals from different sectors of the lumber and building material industry to share their expertise, with a heavy emphasis on practical, tactical strategies to help you serve your markets and grow your business.
Join LBM Talks host, Thea Dudley, as she brings her razor-sharp expertise to dissect trends, regulatory changes, and offers real-world advice for credit professionals. Among many endeavors, Thea writes a monthly Credit Q&A column for LBM Journal. Credit managers from around the country send Thea their questions and ask for her input. With only one column published a month, several questions are left unanswered. In this episode, Thea addresses these archived questions.
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Prefer to read about it instead? Take a peek at the transcript below for Episode 4: The Column Continued: Answering Your Questions
(Editor’s note: Transcript is AI-generated and may include some errors.)
“Hey, welcome everyone to another episode of LBM Talks Credit. I’m Thea Dudley, your host, also known as the Credit Overlord, and this is the only podcast that deals specifically with trade credit in the building material space. For those of you familiar with me? I am or not familiar with me. I write the credit advice column for LBM Journal and do the monthly webinars as well. Been doing credit for about 40 years in lumber and building materials. So if you’re new to credit, whether you’ve been in it for as long as I have, this is the podcast to come to find out everything that’s happening. Sometimes you can’t wait for a webinar or a column to come out to find out, hey, what’s happening, what’s the latest, or I’ve got a quick question, or, you know, I just want to vent on something, or get some insight from other credit professionals around the country. If that’s the case, tune in with us. We come out every other week. I think it is Sally. For those of you not familiar, Sally is the producer for LBM Talks credit, and she is fabulous and does a wonderful job. So if you get a chance to meet her at the LBM Journal conference, then please stay. Please stop by and say hi to her. She’s absolutely great.
Well, it’s a good thing you’re here, because I’m about to hurt myself with all of this stuff. So we’re going to talk today about the column comes alive. Everything that didn’t make it into the column, and, oh, that’s what I started to tell you, is if you want to get a hold of me, just reach out to me at Thea, at credit overlord.com, or you can reach out to operations at LBM journal, and they will be able to get everything to me, but we’re going to talk about all the a lot of the things that come out or questions that come to me, because I get to spend a lot of time with credit people across the country, lots of conversations, lots of zoom meetings, lots of conferences, and just being part of people’s credit departments across the country, I get a lot of, like, one off questions that you can’t really make a call amount of because they’re, you know, much shorter answers, but they’re just as legitimate and they’re just as frustrating. So we’re going to talk about those today. We’re going to kind of credit comes alive.
So let’s jump into it with our first question. And first one is, can we report a nonpaying customer to the credit bureau? And how do you do that? Well, yeah, you can, you can, you can report your nonpaying customers. However, you just can’t cherry pick your AR. You’ve got to turn over that whole AR report to the credit bureau, not just the slack jaw, dead beats that you want to hurt. And I get it, you know, I I experience the desire to retaliate against offenders who abuse my trust. But you can’t just report the one off, so you’ve got to get everybody on there. So, you know, share the love. Share your AR with whatever you know, credit bureau flavor of choice you like, whether it’s, you know, credit safe, D and B, nacm, Experian, Equifax, you know, whatever just you’ve got to share the whole thing so they make it painless. It doesn’t cost you anything. You just connect with one of the credit bureaus and you’re like, hey, I don’t want to pull report. Maybe you are pulling reports and you’re not turning in. Because what I typically hear on that is, I don’t want to turn in my AR. I don’t want people to know that I’m telling on them. It’s like, Honey, I’m not telling on you. You told on yourself. It’s just like a personal credit report. Yeah, I didn’t want one, but I got one. Businesses may not want one, but they got one, but it’s super, super easy for you to just turn it in. You’re helping your good customers out, and you’re, you know, not so stellar. Guys are getting their just desserts. It’s like, Hey, I sorry that your rates went up with your insurance company or whatever, but that’s what’s on the credit report. Is on the credit report. I didn’t create this for you. And if you’re not aware, if you’re new to credit and you’re not aware, banks, insurance companies, bonding companies, leasing companies, all pull credit reports on companies when they’re going for getting their insurance renewed, they want to look and see how you’re paying. What the risk is there. Bonding companies got a lot government jobs will ask what your DUNS number is, and a DUNS number is just the DNB number. They’ve been around about 200 years, but I think they’re starting to incorporate maybe some other credit bureaus as well. So, you know, I’m not an expert on that, you know, keep my ear open for what’s happening there, but help yourself out. It’s easy to set up with any of the major commercial credit reports. They’ll take that, that information, because that’s their stock, and trade. They sell information. So they’re always going to take it from you. There’s no fee, and all you have to do is follow the, you know, mostly easy instructions. It’s really just your compute your ERP system, sending your report to their system, and it processes in with that. So. You know, I’m sure they’ll, they’ll send you a demo there. They’re always dying to get lots of information. So if you need some help with that, if you need some help, you know, connecting with somebody sometimes calling the one 800 number feels like, you know, you just took your shoe off and beat yourself in the head. So do yourself a favor if you have you know, some people that you know that use different credit reporting agencies reach out to them if you’re totally stuck via credit overlord.com I’m happy to help you.
Okay, next question, does anyone else use a bank reference to verify a business? Well, you, my friend, are brilliant. This is a great idea. I don’t know why we haven’t thought of this before, except for the fly in the ointment, which is getting the bank to respond, and when they finally do respond, is it in a timely and useful period of time? If it takes me forever for them to respond, then it’s like I could have already had a bunch of material go out the door to this guy, and now it’s like, No, he doesn’t have an account here. It’s not a legit business like, well, now I’m 50 shades of screwed. This is great, so it would definitely be one of the most definitive ways to verify if you’ve got a fraudulent, you know, potential fraudulent customer on your hands. But you can also go to the Secretary of State website to verify a business you know who they put down as the either owner or, like, blanked out on what they call it, but there’s, there’s a name for it, where it’s, you know, here’s the, here’s the, the person who filed it. It’s also a great website for verification. They’re normally free, and they’re immediate, so it’s at your disposal and at your timeline. Another option is requiring a w9 or if your state requires contractors to have a bond or a license, you can ask for a copy of that. Or you can go out to your Contractor Licensing website and see if they’re on there. And that really helps out quite a bit. Third question of the day, are paper or online? Are paper or online credit applications better? I don’t know about better. I don’t know if there’s a better on it. I think it depends. I don’t think, I really don’t think credit, paper, credit apps, are ever going to be gone. You’re never going to get rid of them. I think there’s a place for them, but I typically can’t read them. That’s why I love online. Even, you know, signature component, no signature component. I love online because I can read them, if someone can go in there and fill it out. That really helps me quite a bit. Because I what I noticed is, I swear to God, the advent of computers has just wrecked everybody’s handwriting skills. I know mine have personally gone downhill. I look at I take notes from something, I look back, and it’s like I don’t even know I was there in this conversation. I don’t even know what I was trying to say. It’s so much easier for me to whip out my iPad and just take notes that way, because at least then it’s spelling correct. As I go along, I look back at something, I’m like, I look like, I wrote this with a crayon, with my with my feet. It’s horrible. So having somebody fill out a paper application and trying to figure out what they said, what the numbers are. Everybody’s penmanship has just gone down the pooper. So I like that the online is clear to read. I think there’s occasionally, maybe somebody’s, you know, not going to have, you know, the opportunity maybe to do it by online. I don’t know who these people are, you know, and I, I’ve never seen so many Amish in my life that when I bring this up, that’s the first thing I hear. We have a lot of Amish customers. You don’t have that many. And here’s a clue, they pay their bills. So I’m, I’m not saying I don’t want a credit app from them, but typically, the Amish take care of that. They are not your problem. So, you know, Amish and Mennonite, I usually have no problem with them. So their community handles them, their stuff themselves. So, you know, when I’m looking at, you know, handing out a paper one, nobody has a typewriter anymore. So if you could have a link that, you know, your sales people can just, hey, I’m not carrying paper around anymore. Let me send this. I can send it to your phone. I can send it, you know, shows up, you know, on your email, whatever it is, you can fill this out if you don’t have an opportunity to have a signature component to it. All they have to do then is save the data, print it and sign it, scan it, send it back to you. It’s, yes, it’s a few more steps, but it’s sure better than, you know, somebody filling it out. I don’t think paper is ever going to go away, at least not in my lifetime, but I do like the ability to have flexibility to all my customers. I want to be able to have that. But just like with payment portals, I’m pushing everybody to an online credit app.
What can I say to a sales rep who has proven himself to be not trustworthy. Oh, well, what can’t you say? Dude? You’re a freaking liar. You’re not trustworthy. Just tell him straight up. So what can you say? I some of it depends on what did he do? You know, when we talk about not that there are layers of trustworthy, but what exactly did he out and out lie? Because, you know, if you lied, you know, bummer. I’m not bummed out that you lied. I’m bummed that now I can’t ever trust anything that comes out of your mouth. So I, frankly, I just tell him, you know, I can’t trust you, and then I tell him exactly what the tipping point was that created that lack of trust. And as ironic as it seems, and credit managers, this is our like stock and trade, we end up being the person who has to come out and say some of the stuff that nobody wants to hear. And it’s not I get labeled confrontational. It’s not that I’m a confrontational person. I just know that I’m either going to deal with it now or deal with it later. So it’s easier to go, no, no, we’re going to talk about this right now, because I don’t know whatever this was, but it needs to stop, and that’s not what we talked about. So you know, whether it’s their blabber mouthing, whether it’s lying about a customer, and when I say lying, you knew something was going on and you didn’t tell me. That’s the same as lying, that’s just lying by omission. So you know, if we’re in this together, and you wanted me to take a chance on a risky customer or a new customer that you know didn’t have any credit at all, and you’re like he’s new but he’s gonna blow up huge, because they’re all gonna blow up huge. Then, you know, don’t act like you never met me if something goes wrong. So you know, when someone proves themselves to be untrustworthy. I forget who said it, but it’s Hey, when someone tells you who they are, believe them the first time. It only takes one time for you to, like, leave me hanging by myself. And now this happened, yeah, trust denied buddy. This is happening. So what can you say? Hit him with it straight hit him straight on. Here’s what it here was my tipping point. Good luck with that. Let me know how that one goes, because those are, those are always interesting.
So next question, the I read a column of yours a long time ago that mentioned the seven ds of credit, and I can’t remember them and I can’t find the column. Can you tell me them again? Oh, yeah. So this was a credit manager, bestie and I were hanging out together, and we were talking about just customers that the customer lines that come up, and you’re like, geez, you know, everybody hits me with this stuff, like, it’s the first time I’ve ever heard it. And it’s not that I don’t have empathy for other human beings, you tend to get a little jaded as you hear the same things over and over. So I’m going to tell you the 70s, and I’m pretty sure, and the last year, we came up with the eighth one. That escapes me right now, so I’ll have to get I’ll have to get on jail for that one. But so drugs or drink, dice, dames, disease, divorce, disaster, and finally, death. And there’s never just one of the seven. There’s never just like he’s a flaming alcoholic, and that’s why his business is failing, and he drank away all his money, or he went to Vegas and he gambled it all, or he spent it on, you know, Trixie, the wonder stripper. So it’s usually a combo platter of calamity. So think of it like a Southern meal. Like, you know, down here in the south, we have the meat and three, I don’t, I don’t know, in your part of the country, if you have meat and threes, which, you know, when I lived out west, I never knew about a meat and three. I moved to the south, and suddenly meet in three. And it was intriguing to me. I thought it was brilliant. And as a side note, and Sally, I don’t know if you’re aware of this, because you’re in Michigan, but in the south, they list peach cobbler as a vegetable. I love it down here. That’s probably why I can’t lose any weight. Is peach cobbler is listed as a vegetable under meat. And three, how can you get mad at that? But back to the classic deadbeat platter. So the classic combo is usually dice drinking and dames. It’s, you know, they keep it old school, but the combinations are endless. And as a side note, when I hear divorce, I just go ahead and reserve 100% bad debt on that one, because that never works out, and I’m just going to lay that on you. Bless your heart. You poor sorry, son of a gun, you actually think you’re going to come out of that with something, because what every credit manager hears Thea, when my divorce is final, honey, I’m going to pay you. And. Every dime, and I’m gonna pay you with interest. Okay, I never get exact. I hope you do. But experience your time after time, year after year has proven that’s not going to happen, and when you finally do get divorced, there will not be enough left for you to put in a tuna fish can disaster and disease are the toughest. Oh, and circling back to that divorce, I only had one, one guy, one customer in all 40 years I’ve been doing this that actually paid his bill when he got divorced. So those odds are horrific. They’re not great. So divorce, reserve 100% disease and disaster are the toughest. You know, I’ll work with anyone for as long as I possibly can, but at some time, at some point, it’s unrealistic to believe that any company is going to be able to carry another company’s financial burden for an extended period of time with, you know, no no end in sight or no progress being made. It’s not that I don’t have a heart. I do natural disasters. I get it. You try to make accommodations for people. You work with them, but they have to work with themselves, too, and it doesn’t help that, you know, we have Facebook and LinkedIn and Instagram and Snapchat and Tiktok and all of these social media platforms that credit managers use as a tool stop putting that you bought a yacht on your Facebook page or took all your employees On a trip to the Gulf of, you know, Mexico or wherever, because I can see you can’t pay me, but you’ve decided, we’ve all been working really hard. This is so sad. It’s been such a tough year. We all decided we needed to get away. No, you need to pay your bill, because you’re not going to be able to employ those people. They better enjoy this vacation, because it’s probably the last thing they’re going to get out of you guys, because now I’m going to have to, you know, take it to the next step, which is FYI a lawsuit. So it’s not that I don’t have a heart. I have a fiduciary duty to my company. Disease is a little tougher. I don’t wish bad things on anybody. Unfortunately, things happen to people, but you can’t always make your business somebody else’s, so in the case of of disease or disaster, I try to work with them as much as I can. But let’s talk about what the long term is, and we can’t use hope as a credit tool. So I hope that helps you out. When I figure out what that eighth D is, I definitely will pop in on it.
Next question, when was it deemed acceptable or okay not to pay your bills? I don’t know if this was really a question so much as just a rhetorical statement by somebody. They’re just like, Why is it okay for you not to pay me? It was totally okay for you to call me and say, Hey, we need credit, or my favorite is the contractor that goes I don’t need to fill out a credit application. I don’t need anything from you. I gave you, I gave you this job. You’re supplying materials on this job. Yeah, I know, and we’re not doing it for the glory of being your buddy. This is a business transaction. If you aren’t paying me up front, we are giving you credit. So when was it deemed okay or acceptable not to pay your bills? I don’t know. When did bankruptcy become socially acceptable? It used to be where people were embarrassed to go. I might have to file bankruptcy, and they were, like, super secretive about it, and they didn’t tell anybody, and they were embarrassed if you brought up. Have you ever filed bankruptcy? So stop put just that’s an you know what? I needed to put that on the pet peeve podcast, because that’s another pet peeve. Stop putting that on your credit application. Have you ever filed bankruptcy? Even people that have filed bankruptcy just lie about it. They’re like, nope, if you can’t figure it out, and it wouldn’t be on this company, usually, because if they filed bankruptcy, you usually know about it, or it would show up on a credit report, but usually for an individual that started another company, have you ever filed bankruptcy? Here’s how they justify it. Well, no, this is a whole new company. You know, proud Eagle contracting has never filed bankruptcy. Dude who owns it might have bankrupted three companies before, but this one’s new. I don’t know why you’re not getting that. So I don’t know how it became socially acceptable not to pay your bills and that it’s okay to file bankruptcy. I get it. I get some people have no choice. Don’t get me started on the medical profession at those I see those on credit reports, and I tend to be a little more tender hearted. So yes, I do have a heart, and it does kick in. Okay, Sally, you can stop making fun of me for those things, because we talk about that a lot behind the scenes where it’s like,is there any group of people that you like? Sometimes. Most, the people that pay me, the people that don’t make my job harder than it needs to be. So, you know, I think this is kind of just a, I don’t know, I don’t have an answer for you. Your guess is as good as mine. I think this is rhetorical, and it’s just put this down as something every credit manager asks themselves from time to time. I don’t know how it’s acceptable to blow me off or string me out and not pay me, and when you finally do pay me, it’s like, well, I just gave you a 500 last month. I can’t believe you’re already fussing and complaining about it again. It’s like, yeah, we’re awful that way. We kind of like to get paid so, you know, we can pay our employees. Oh, I gotta get off of that one, that rhetoric could go on forever. All right.
Next question, hang on, I gotta hit myself with some more coffee after that. Yeah, like, I need more coffee to tear me up. Fraud. Can you sum up the biggest challenge? Ooh, let’s do that one again. Can you sum up the biggest challenges facing credit managers right now? Ooh, we’ve been talking about some of these a lot lately. Fraud. Fraud is huge right now. I mean, just huge credit card fraud, ACH fraud, wire fraud. We covered. We had a big fraud episode with the podcast, slow pay more bad debt than you know, what you normally carry in a traditional year or a normal year. And cod issues, cods, we thought, had you know, had gotten wrapped up much better, especially when you can do a lot of stuff by payment portal link. You can send that to the customer beforehand. You can get the cod paid. You didn’t have to rely on the driver to pick up the check, so that helped out quite a bit. But payments are slowing down and it’s getting harder and harder to collect money. Credit managers across the country that I talked to are reporting more uncollectible accounts. Those are going up every month. I watch for the credit manager index to come out, and it just keeps reporting that. You know, collections have gone up like 57% and it’s just not easy out there right now. So cods are back to becoming an issue sales people letting them go, saying, hey, customer is going to pay it on Friday. Well, looks like it’s Monday, and I’d like to remind you that this customer is cod. For a reason, we didn’t have the confidence that they would pay us. So thank you for you know, thank you for taking my job and deciding it was your opportunity to make decisions. So cod CIA looks really good about now, when that happens, but those are the the big things, cods that are going out without being collected. You know, fraud is huge. And then, you know, payments slowing down. It’s getting harder and harder to collect that money. So I think we’re going to stop there, you know, Sally, I think, you know, I, I heard you queuing up some music or something. We’re gonna take a break. But you know, I love that you guys are able to send in these questions. We can get to them. Happy to always answer any questions that you have. Thank you for joining us for another episode of LBM talks credit and I will see you next time. Once again, my name is Thea Dudley, credit overlord with Sally, my fabulous producer, and we will catch you at the next episode. Thanks a lot.”
