Analyzing Information to Establish Credit Limit

A company's industry, profit margin and philosophy should play a major role in the amount of risk the company is willing to take.

If your industry is highly competitive and the company is in growth mode, being more aggressive by making higher risk credit decisions may be OK. On the other hand, it may be advisable to be conservative if your company is not in growth mode.

Other factors such as the type of product or service, marketing strategy, and strength of the credit and collections department are important in the credit decision process.

With the above taken into consideration, the amount of credit to extend should be based on historical data gathered in the investigative phase. It is advisable to establish a credit scoring model that meets your company's growth goals and risk threshold.

For help developing a credit scoring model, contact us.

Aguirre, Aikman + Brown has definitely been a great help in collecting some of our difficult debts. There are so many collection agencies available whose level of service cannot match that of AAB's. They have great finesse, and have handled our accounts with professionalism and patience.

Penny Cassell
Dodson International

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