CHAPTER 4: CREDIT MANAGEMENT
4.13 Credit and Existing Customers
The credit department’s responsibilities include a regular review of existing customers’ payment histories. Customer review should be done at a scheduled interval depending on the nature of the account, balance, and industry. Options include monthly, quarterly, and annually—or on an exception basis with the use of alerts driven by key changes in an account or customer profile. Examples of this include: Alerts based on changed internal or external credit scores; A public filing such as a lien or bankruptcy reported by a credit report; Repeated aging of the account; For B2B, a change in the company ownership or legal structure; and A customer continually exceeding their credit limit as their business and requirements have grown. Any customer who was opened as high risk should be reviewed at least quarterly. All other customers should be reviewed annually. The purpose is to see if credit lines should be lowered to reduce risk, raised to increase sales, or remain unchanged. New Documentation: Each anniversary year of the customer, new documentation should be requested, especially financial reports from the customer and from the credit bureau. It is Important to analyze trends. Are their financials stronger than last year, weaker, or the same? This will help you to evaluate whether the credit limit should stay the same, be increased, or be lowered.
Customer review items:
Review the customer’s payment performance with your firm. Government “blocked” lists: Make sure customer maintenance has rechecked this customer against these lists. Credit bureau: Get updated reports, alerts, and credit scores. Credit groups: Request updated information on these customers. Get new financial reports if a year has passed—analyze against previous years. Call the original references and update their pay history. Contact the sales rep for their opinion of current customer status. Conduct a personal visit (with the sales rep) if a large amount of money is involved. Redo the internal credit score and see if the credit line, terms, and pay method should be changed. Update the customer file and send out a revised acceptance letter, with a copy to the sales rep, including the following: { Adjusted credit line; { Where and how to send payment, and payment method; { Terms and a statement of expectation that they be met; { Late fees; and { Other policies (e.g., for B2B, the government may require updated tax certifications every year).
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THE ACCOUNTS RECEIVABLE SPECIALIST CERTIFICATION PROGRAM E-TEXTBOOK
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