CHAPTER 4: CREDIT MANAGEMENT
CREDIT GROUPS (B2B) A credit group is a gathering of credit managers within an industry who meet periodically to share information about customers’ credit status and creditworthiness. Membership in a credit group (also called a trade group) is very valuable, enabling credit managers to receive current payment trends on customers, especially after they have assigned a line of credit. Prior to the meeting, every member sends in a list of customers for whom they need a payment history. Members are required to bring payment history information about the customers on the list to the meeting. These groups usually meet once a month in a local region. However, there are also virtual meetings that you can attend. The members of the credit group can provide up-to-the-minute information on how the customer pays its current bills and any scams that the members have learned about. A guest speaker may address important topics. This, along with the credit bureau report and score, can help create a picture of a customer’s accounts payable practices and how financially stable or overextended they are.
Care is taken to avoid any discussion of price or terms setting in order to avoid antitrust violations.
PERSONAL VISIT For any customer a company may be extending a very large credit line to, it is a good practice for the credit manager to visit the customer in person, together with the sales rep, to obtain personal insight into the customer’s business. By extending a customer a credit line, a company is effectively investing its cash into that customer’s property and business. 21st Century tools and technology have given businesses the opportunity to sell globally, so site visits may not be possible. The next best thing to a site visit is to have the local sales representative visit, but again there may not be a “local” sales rep, so a credit manager can make use of Internet tools like Google Earth to get a look at a customer’s facilities. SALES TEAM The sales team is the company’s eyes and ears into the customers’ business. What they see and hear can be extremely valuable to the credit manager. Talk with the sales rep to learn what amount of sales he or she thinks the customer will be placing, potential company growth, insight into the customer, the physical condition of the customer’s facilities, and so on. The sales rep’s input can prove to be priceless, especially when deciding how much risk to accept in assigning the line of credit.
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THE ACCOUNTS RECEIVABLE SPECIALIST CERTIFICATION PROGRAM E-TEXTBOOK
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