CHAPTER 4: CREDIT MANAGEMENT
Business { Tax Certificate or Sales tax exemption certificate, if applicable { Accounts payable contact information { Legal status: (sole proprietor, partnership, corporation, etc.) { Supplier references (3-10 references) { Bank reference { Officers of the company { History of the company (short summary) { Business plan for one year—five years for large lines of credit { Financial statements (three years): balance sheet, income statement or profit and loss, auditor’s report { Orders that are taken over the phone, the Internet, or through the mail usually require shipping destination and payment at the time the order is placed. This can be done with a credit card, various pay-cards, or other electronic methods. The credit card company takes responsibility to check the blocked lists. Bank, Personal, and Trade Reference { On the credit application, the customer (B2B and B2C) should supply their bank information, personal references, and business references (companies they buy from). If you are doing your own in-house reference checking, you may call these references or send out a letter asking for their experience with the potential customer. While it is optimal to get this information in writing, expect to document the information in your AR or credit origination system yourself. However, proceed with caution because the customer will be providing their best references. You will still want to try and find other references through credit bureaus, credit groups, and other resources in order to get a complete financial picture. Clear written policies and procedures are needed to direct the credit manager regarding which documentation and what additional information is required. The credit application will be used to secure other information, such as the consumer or business credit rating. Once the information is collected and analyzed, it will be used to set the customer’s line of credit. The policy and procedures on how to research and set the line of credit should be clear and repeatable across credit managers. The policy and procedures are not enough, however. Since there is a degree of subjectivity in the decision process, ethics policies and knowledge of the law must guide the credit manager in making the best decision to protect cash and support sales goals.
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THE ACCOUNTS RECEIVABLE SPECIALIST CERTIFICATION PROGRAM E-TEXTBOOK
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