Credit Policy for businesses and how to extend credit and manage credit risk

Take this easy and quick “test” to see if you are on top of your debt collections.

1. Do you have more than 10 customers that are past due?
2. Do you have a signed credit application for every customer?
3. Do you have set criteria for extending credit to new customers?
4. Do you have a “plan” in place if a check is returned for NSF?
5. Is your staff aware of all your credit policies?

ANSWER KEY:

1. If you have more than 10 customers that are past due, do something today! Something can be as easy as giving them each a quick call or sending out 10 letters by priority mail for immediate results.
2. If you answered no to this question, use my FREE Credit Application and start today! Print out the application and put it on your counter with pens today! Mail out copies to all customers who have never filled one out. Make a note in your computer so you know if they returned it. CHECK the references!
3. When someone comes in or calls you to place an order, how do you set up the account? Is it pre-pay until credit is checked? Do you extend credit without any paperwork or information? Your steps can be as easy as fill out and sign this credit application, then pay cash until we can check your references.
4. This can also be an easy step by step process.  If a check is returned, first call the customer, tell them the check was returned and you need them to come in with cash immediately including the NSF fees. You can also revoke credit until a money order is sent if it is not feasible for the person to come to your office and pay cash. Put all orders on hold and require cash only for all future orders.
5. Does your staff know what to do if a check is returned, or a new customer walks in, or someone places an order and is already 70 days past due.  Hang a short list of steps by the computer or the phone to make it easy for your staff.