Extending Credit Terms with Confidence

The job of a credit manager is to find a way to complete transactions; it is not to turn down orders. Being creative with credit decisions can help obtain sales goals while minimizing risk.

Obtaining information and making credit decisions will require an investigative approach. Find information sources that you are comfortable with and use them to help with credit decisions.

The depth of the initial credit investigation should depend on the amount of credit being requested. Your credit policy should dictate the extent of the initial investigation for certain requested dollar amounts. The following is an example of an effective approach for requests up to $20,000.00.

Effective initial investigations include:

• Verify company information provided on the credit application through your information sources, Secretary of State Corporation databases and Bankruptcy databases.
  • Match the physical address, phone number, years in business, owner information and employee numbers if available, fax and website information
  • Research public records for liens and judgments
  • Initiate a Bankruptcy search
  • Initiate UCC filing search
  • Review credit trade lines
• Telephone credit references check - Ask for the following:
  • Verify the company name and address
  • How long they have been doing business together
  • The amount of highest credit extended
  • Current balance due
  • Past-due amount
  • Date of last purchase
  • NSF problems
• Bank reference check - ask for the following:
  • Length of time as customer
  • Deposit Balance
  • Credit Line Information

If the credit investigative process takes too long, it could result in a loss of sale or customer. Well-defined credit investigation processes detailed in a credit policy can decrease the time taken for this initial investigation. For help conducting an initial investigation, contact us.

In my 25 years of experience in the credit field, I have furnished many collection agencies with accounts and I find that Aguirre, Aikman + Brown is one of the best agencies that I have been associated with. I would strongly recommend their organization and suggest you give them the opportunity to achieve the results you expect.

Jeffrey L Grimes
Credit Manager, Cleveland Brothers Equipment Co., Inc.

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