CHAPTER 4: CREDIT MANAGEMENT
4.5 Credit Application
A credit application form should include all the data that will be needed by the credit manager and the customer master file staffer (who should be concerned with what the billing and cash application staff need to properly invoice, receive and apply the cash). Review and verify that your organization’s credit application meets this requirement. To ensure that the data being received from an applicant seeking credit is accurate, it is imperative to have the customer complete and sign the form. If you require any documentation to be sent to the credit department, list what documents are needed and how they should be securely sent to the appropriate staff member. For a consumer, you may require a copy of a driver’s license or passport, while for a business you will require their Certificate of Tax Status. This is the documentation you will use to validate that they are legitimate, as noted above. Depending on how orders are taken, it is possible to automatically require a new customer to complete a credit application form. For example, if ordering on the Internet, the customer will not be able to place an order until they enter their user ID or create a new account. If a sales representative takes the order, the rep should give the customer the credit application—and explain that it must accompany the new order or the credit department will contact them. It is a best practice to have the application completed at the time of the order to remove delays in processing the order. If the sales representatives do not have this responsibility, it will be necessary to mail an application with a cover letter to the potential customer. The cover letter will explain that the order cannot be processed until the information is received and validated in order to set up the opening line of credit, payment method, and terms under which the company and the new customer will conduct business. Hopefully, the organization will see the value of the sales rep or website requiring this information at the time the order is being placed.
An application form should request the following:
Legal name Bill-to/Remit-to address: Person’s address or, for business the Accounts Payable or bank address (known as a lockbox) Shipping Address: Where the goods or service should be delivered Consumer { Tax identification { Contact information for questions
{ Legal Status: single, married { Three personal references { Bank reference { Tax returns or proof of income: copy of paycheck
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THE ACCOUNTS RECEIVABLE SPECIALIST CERTIFICATION PROGRAM E-TEXTBOOK
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