In the fast-paced world of steel trading, credit decisions carry serious weight. A delayed payment from one customer can ripple through inventory planning, cash flow, and even supplier relationships. That’s why knowing when to escalate an issue is just as important as knowing how to assess risk.

For credit analysts in the steel industry, escalation isn’t about finger-pointing or bureaucracy—it’s a strategic function designed to protect the business. But too many analysts either pull the trigger too soon or wait too long. The result? Missed opportunities or avoidable losses.

Let’s dig into the best practices and protocols every steel credit analyst should follow to know exactly when it’s time to raise the red flag.

The Purpose of Escalation

Escalation is not failure—it’s a controlled process to involve higher levels of decision-making or additional departments when a situation exceeds your individual authority or requires broader visibility.

In the context of steel credit, escalation ensures:

High-risk decisions aren’t made in isolation

Reputational or financial damage is minimized

Timely intervention occurs before problems snowball

Common Scenarios That Require Escalation

While every business has its nuances, the following situations almost always warrant some level of escalation:

1. Consistent DelinquenciesIf a customer repeatedly appears in the 60–90 or 90+ day column, it’s no longer a collections issue—it’s a credit policy issue. Escalate to review their terms, limits, or even their viability as a customer.

2. Breach of Credit TermsWhen a customer blatantly ignores payment deadlines, violates payment agreements, or exceeds their credit limit without prior discussion, escalate to finance leadership or legal as needed.

3. Large Orders from At-Risk CustomersIf a high-risk customer suddenly places a significantly large order, pause and escalate. This could be a last-ditch effort to secure materials before default—or a legitimate growth move. Either way, get executive input.

4. Payment Promises UnfulfilledA customer that repeatedly promises payment “next week” but fails to follow through may be stalling for time. Escalate to assess next steps—perhaps hold future orders or start legal notice proceedings.

5. Financial Red FlagsIf you receive or uncover troubling financials—declining revenues, poor liquidity, or high debt ratios—raise the issue immediately. Don’t wait for the next missed payment.

6. Disputed Charges or Unresolved DeductionsWhen an account is on hold due to unresolved billing issues and neither sales nor customer service can reach resolution, bring in management to align priorities.

Define Escalation Tiers

Escalation should be structured—not chaotic. Build out levels of action based on risk severity:

Tier 1: Internal Review (Credit Manager, Sales Rep)

Tier 2: Cross-Department Coordination (Finance, Legal, Operations)

Tier 3: Executive Involvement (CFO, VP of Sales)

Tier 4: External Action (Collections Agency, Legal Proceedings)

Having a playbook ensures consistency and prevents emotions or politics from clouding decisions.

Timing Is Everything

Don’t wait until the 90+ day column becomes a trend. Escalate when:

Promised payments lapse without explanation

Order blocks trigger more frequently

Customer sentiment or responsiveness changes

Internal teams signal unease about an account

Being proactive allows leadership to act with options, not urgency.

Document Everything

When escalation happens, documentation is your best defense—and your best guide. Always log:

Timeline of events

Communications sent and received

Payment behavior trends

Internal notes or team input

This creates a trail that supports your case and helps leadership make informed decisions.

Collaborate with Sales and Customer Service

Escalating a customer issue doesn’t mean blindsiding your colleagues. Before raising the flag, brief the account manager or customer service rep. Often, a united front can solve issues without further escalation.

And if escalation is needed, involving the full team ensures no one is caught off guard. It also protects the customer relationship, ensuring discussions stay solutions-focused, not accusatory.

Know Your Escalation Triggers

Every credit analyst should have personal and organizational triggers for escalation. These could include:

DSO increases by more than 15% in a month

Two or more payment defaults within a quarter

Credit utilization exceeds 100% with no communication

Operating cash flow from customer financials turns negative

Turn these into alerts or dashboard flags so you’re not caught by surprise.

Empowerment Through Boundaries

Ironically, escalation isn’t just about raising issues—it’s about knowing your limits. A strong escalation protocol gives you confidence to act within your authority and clarity about when to seek help.

When those boundaries are well defined, you spend less time second-guessing and more time managing accounts effectively.

Final Thoughts: Escalate Early, Escalate Smart

In the steel business, timing is everything—and that includes when to escalate. Waiting too long invites risk. Acting too soon without facts can damage relationships. But with the right protocols, judgment, and communication in place, escalation becomes a strength, not a stigma.

So don’t be afraid to raise your hand. Because in credit, silence can cost more than speaking up.