When you have your customers fill out a credit application, it doesn't do you any good if you just file it away. You must use the application to find out if you want to extend credit to this person, and how much. Check all the references, the personal and business, such as a bank reference.
6 Guidelines for Checking References:
- Pick one person in your establishment that will be in charge of the credit applications and checking references.
- Check both, personal and business references.
- Use the internet, look up the companies they do business with and see what type of business it is before you call for the reference. That way you can ask specific questions based on their industry.
- Be careful, use caution when extending credit limits. You can always raise them later but it is much harder to lower them.
- Treat your credit policy as gospel until you make a decision to permanetly change something.
- Make a commitment to review your credit applications at least once a year, and review your customers credit limits.
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