Creditprousa's Blog

April 27, 2010

A STRONG CREDIT POLICY IN A WEAK ECONOMY

The weaker the economy, the stronger your credit policy must be.  You’ve probably heard the saying  “…a sale is not a sale, unless it’s paid for…it’s a gift.  This couldn’t be truer today given our tough economic climate.  Desperation to make a “sale” oftentimes interferes with making the right decision to either deny credit and insist on COD terms or in the alternative getting a large down payment to minimize the amount of credit extended to the prospective customer.

To substantially reduce the potential that you will not be paid for your product or service as a result of extending credit, you truly need to take some preliminary and necessary steps.  First, if you believe you want to extend credit, you need a good credit application that not only provides some detailed information about your prospective customer, but also contains language that will bind that customer to your payment terms with his/her signature.  Second, you must thoroughly investigate the information provided by the prospective customer on the credit application.  Only after you have obtained complete information from your prospective customer and have investigated and verified it, can you then make an informed decision to either extend or deny credit to them.

Having said all of this, and although these are steps in the right direction, if you don’t possess the training or knowledge that are necessary to make an educated decision based upon the information you have been provided by the prospective customer, your exposure to non-payment could still be substantial.   Consultation with an experienced credit professional to assist you in making the correct decision is highly recommended.   CreditPro Financial Services, LLC, employs skilled and knowledgeable credit management professionals from varied industries to help you.  In addition to its many other products, CreditPro Financial Services, LLC can provide you with proven credit applications and guaranty instruments for your use. Once you have obtained the desired information from your prospective customer, CreditPro Financial Services, LLC can investigate and verify that information, evaluate their credit-worthiness and recommend the extension or denial of credit on a case-by-case, as needed basis, thereby eliminating the need to enlist the services of a full-time credit manager or credit department.    Make your company more profitable by properly extending credit through the use of the proven products and services provided by CreditPro Financial Services, LLC.  Please call 216.402.9988 or visit us on our website, www.creditprousa.com for more information.

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MAINTAINING A STRONG BUSINESS RELATIONSHIP WHILE HELPING TO MINIMIZE DSO

One of the most important things to remember in establishing and maintaining a strong credit policy is by maintaining a good working relationship with new and existing customers through constant communication.  This practice begins with a company’s sales department and is re-enforced by the company’s credit department and finally by the company’s owners.

It is of the utmost importance that new customers are contacted shortly after placing their first order to determine if there were any difficulties with order placement or product receipt, and that the order/receipt process went as they had expected.  Once it is determined that all went well with the customer and they were satisfied with the product or service, the call can be closed with a reminder of payment terms.

The close of the call could go something like this “…I am pleased that we were able to satisfy your business needs Mr. Johnson.  As a reminder, our payment terms are ——- and we look to receive your check for the balance by (insert date), Thank you very much for allowing (insert company name) to be of service to you.

This telephone call accomplished several things:

1.)    Did the customer receive his merchandise or service?

2.)    Was the merchandise or service satisfactory?

3.)    Was the merchandise or service received in a timely fashion?

4.)    Did the customer have any questions?

5.)    Eliminated disputes or deductions based upon faulty product or faulty service.

6.)    Re-established payment terms.

Diligence and follow-up are essential in maintaining strong relationships and minimizing DSO.  The experienced staff CreditPro Financial Services, LLC, will be pleased to provide this service for you or train your in-house personnel to minimize risk and maximize return. Please call 216.402.9988, or visit us on our website, www.creditprousa.com for more information.

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