Get the following information from a business and/or consumer seeking credit:
• Business’ and owner’s name
• Length they have been in business
• Address, length of time at that address and a former address
• Balance sheets and/or IRS returns
• Phone numbers of business and principal’s or residence
• Bank name, address, phone numbers
• Credit references, Personal and business
• Employer name, address and phone numbers
• Length of time at current employment
• Marital status, name and employment information on spouse
• Total monthly household income
• Social Security number and/or Federal ID#
This information can be in the form of a credit application or contract you may have drawn up. Be sure to have the business owner or consumer sign the document and date it. Keep the original and always give the consumer a copy.
You will then need to verify the information that has been supplied to you. You can run a report with Dun & Bradstreet if the applicant is a business. You can call all references listed, the applicant’s bank and place of employment.
If you are a member of a credit bureau you can check with a credit bureau on the accuracy of the information supplied to you. If you find any information is not true, you should deny credit.
Once you decide you will grant credit, you need to put your credit terms in writing. Always have your credit terms on your invoices and statements.
Once you have invoiced your customer you need to keep a close eye on your accounts receivables. You can print a penalty on your invoices such as charging a 12% penalty on invoices over 30 days past due. You can make phone calls or send reminder notices to any accounts that are past due.
If your business does grant credit, you must comply with federal laws affecting credit sales to consumers. Also, states are beginning to adopt consumer credit laws that mirror federal law. One of the laws you should become familiar with is The
Truth In Lending Act. This law requires you to disclose your exact credit terms to credit applicants and regulates how you advertise consumer credit. Among the items you must disclose to a consumer who buys on credit are monthly finance charges,
your annual interest rate, your terms or when payment is due, the total price and the price if any late fees are added.
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