Image of pageindex72008.gif

Image of credithold.jpg

A woman emailed me, wondering what a “credit hold” is in the mobility industry? She had placed a power wheelchair order with her provider, and he called her several days later, referring her to another provider because he couldn't fill the order due to being on credit hold with the manufacturer of the power wheelchair that she needed.

This story truly impressed and inspired me because the provider clearly had the ethics to put his consumer's needs before his own business issues, and was honest about it – a provider of true integrity. See, mobility providers (DMEs), run their businesses primarily on credit lines, commonly financed by manufacturers. For example, when a provider orders a power wheelchair, he will have, say, 60 days to pay for it, with an ultimate credit limit for multiple orders, as in, say, up to $100,000 of orders at any one time. Typically, the provider will receive payment for the power wheelchair from the insurer for the delivered power wheelchair within 30 days, at which point he then pays the manufacturer within the 60 days, and all is in good standing – the consumer received the power wheelchair, the insurer paid the provider, the provider paid the manufacturer, and the provider then uses the “profit” to cover overhead and salaries. It's truly a typical supply chain/credit line/cash flow business scenario – and when managed properly, everyone wins.

Of course, when the financials of this business model fail, everyone loses – including the consumer. For any number of reasons – from poor business management to delayed or cut insurance reimbursements – providers can end up in a financial crisis, where they have more outstanding debt with manufacturers than they can afford to repay. For example, if a provider has a 60-day, $100,000 credit line that he's maxed out, and not repaying, the manufacturer puts him on “credit hold,” meaning that he's cut-off from ordering product or parts until payments are made. It's not unlike your credit card, where if you max-out your limit, and don't repay the balance, you can't make any further purchases.

Unfortunately, providers on credit hold virtually never disclose the fact to consumers, but actually continue taking new product and parts orders that they know that they can't fill any time soon or at all – typically hoping that they'll somehow get caught up. Meanwhile, consumers' orders and service needs simply sit. In such circumstances, providers often try to buy time by making excuses, namely blaming the manufacturer. Common stalling tactics include claiming extraordinary lead times quoted by the manufacturer, stating items are on back order, or insisting that the manufacturer is uncooperative – again, none of which are true, but merely the provider stalling because he's on credit hold, unable to place orders.

In my roles, consumers sometimes come to me, furious that I, as a manufacturer, have let them down by not filling an order promptly or by not responding to the provider – as told to them by the provider. In these situations, I almost always find that it's a credit hold issue via the provider, where often an order didn't clear credit or wasn't even placed. It's a difficult position for me because I absolutely can't disclose a provider's account status, but I likewise don't want consumers thinking ill of me and my company because of a provider's financial issues and dishonesty – and above all else, I don't want a consumer's needs going unmet. Therefore, as ethically as possible in these cases, I will let the consumer simply know that an order was never placed and suggest a list of other local providers, trying not to disrespect any provider with credit issues, but ultimately striving to protect the consumer's interests by referring him or her to a provider who can meet his or her needs.

Now, what's truly important to recognize toward this topic of credit hold is that it's not always about “deadbeats”; rather, credit hold is like other forms of debt, where good, well-meaning people can find themselves in financial trouble. However, the consumer's mobility must come before all else, and if a provider can't fill an order, he shouldn't take it. I know the mindset, that a provider doesn't want to lose an order today because next week he may be able to fill it. Yet, that mindset is gambling with the consumer's mobility – and that's crossing an ethical line. When a provider takes an order that he knows he can't fill any time soon and lies about it, he merely lessens his reputation, unjustly makes the manufacturer look bad, and, worst of all, harms consumers to a devastating level. Many businesses go through tough times – and it's understandable. However, no one has a right to pull others into the flux – and that's what providers do when they take orders that they know they can't fill any time soon, if at all, when on credit hold.

With all of that said, credit holds are a rarity, and as one finance person put it, “Those often on credit holds are usually the same few cast of characters, not your everyday providers.”

As a consumer, it's difficult for you to know up front if a provider is on credit hold – and, again, it is a rare situation. However, when excuses keep coming up – and when a provider consistently blames others for a never-ending cycle of delays – you should be alarmed (and, if the pattern is occurring to others who you know, that's a real red flag). The fact is, responsible, financially-stable providers are prompt and don't blame others – and when those traits aren't present, there's an issue, where one should seek another provider. And, if the manufacturer is being blamed, don't hesitate to contact them – again, they can't ethically tell you of a provider's financial status, but many of us recognize your position, and are glad to help you navigate around any issues as discretely as possible, so that your mobility isn't compromised. After all, this industry isn't about any single provider's financials, but truly about your mobility.

Published 5/2010, Copyright 2010, WheelchairJunkie.com