From the Currency of International Trade – Part One
A Nugget of Wisdom and Best Practice: The Ability & Willingness (AW) Matrix
Everything we do in sales, credit, and collection revolves around a simple concept of determining the Ability and Willingness of the customer or consumer to pay.
A Company’s existence depends upon the fact that it strives to reach its vision and mission in a profitable and sustainable manner. This requires customers who could qualify to purchase on credit the Company’s products and services. Moreover, these same customers should be able and willing to pay the Company according to the agreed upon terms and conditions.
The goal of all at the Company is to sell to and maintain all customers who are able and willing to pay. These customers are the good payers and they should constitute at least 80%, if not more, of the Company’s portfolio. Those who are not able but willing are marginal accounts that could be nurtured and worked with; but they require creativity, a great deal of care, and constant follow-up. Their accounts need to be backed up by certain credit enhancements, such as deposits, guarantees or co-signers. Those who are able but not willing need to be handled very assertively and they need to be converted to willing customers. Educating and informing these customers on your Company’s needs and requirements is key. A company could pursue credit insurance, if available in that industry or line of business. The last category is that of those who are neither able nor willing. They should not be pursued. The AW Matrix is a cornerstone of sales, credit, and collection management.
This AW Matrix is another nugget I expound and explain in the course: The Currency of International Trade: Part One—Highlights on Credit
Check Point: The process of credit management should always strive to ensure the ABILITY and WILLINGNESS of the customer / consumer to pay.
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Eddy A. Sumar, MBA, CCE, CICE, and CEW, is the Founder of ERS Consulting Services in Rancho Cucamonga, California; he is an International Trade Financing Consultant; a Consultant for the Center for International Trade Development (CITD); a member of the Guidepoint Global Advisors, and an Associate of Quote 2 Cash (Q2C). Mr. Sumar is a research consultant, author, and a public speaker and enjoys writing and traveling. Contact: e-mail: email@example.com.