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home | Credit Procedures
Credit Procedures
Procedures You Can Use to Set Up Your Credit Department

We believe that good credit procedures are the first and most important step to help you with your collections. After all, all the great collection efforts in the world won't help you if you have fundamentally flawed credit procedures.

Here you'll find many articles, procedures you can use to help you set up and operated a smoothly running credit department.

Making Loan Decisions on Marginal Applicants
Decisions are easy on loan applications that are either (1) outstanding, or (2) beneath any reasonable consideration. Where decisions get difficult is when applications are marginal, and they are particularly difficult when the applicant stands in some special relationship with the lender--like a credit union member. . . . keep reading
Collection Processes Outlined
"I don't do much letter writing anymore," notes Jan Perlman, credit manager for Medo Industries, Inc. (Tarrytown, N.Y.). But when her other efforts to make contact with a delinquent customer have failed, she will sometimes send a certified letter--to make sure it is received--and follow up with a phone call. She cites a recent situation with one long-term customer. Medo's experience with this company had been very eventful. After satisfactory relations for several years, credit privileges had to be suspended when they ran into severe financial problems. . . . keep reading
Lending--Up Close and Personal
"The bigger a bank gets, the farther away its decision makers seem to get from you. The farther they get, the easier it is to see you as a file. Or an account number. Or a loan application form. At Anchor Bank, we work hard to deliver the personal attention that your business should expect from a bank." This interview of the president of Anchor provides an inside look at the credit-granting procedures and priorities of this community bank, including such items as . . .
  • why he believes community banks have a distinct advantage over larger banks
  • how often loan officers should be visiting their clients
  • how their loan officers and credit analysts work together to help their clients
  • how and why the "people side" of the relationship is so important
  • why it's critical for a lender to understand the pschology of a individual customers
  • what the first questions a loan officer should ask when visiting a customer
  • what questions they ask when screening potential new clients
. . .
keep reading
This article discusses a New York credit manager's aggressive - but respectful - strategy for telephone collections. It also details how he deals with customers experiencing legitimate cash flow problems vs. those who simply don't want to work with him to pay. It also covers his strategy on the front end when dealing with credit issues. . . . keep reading
Flimsy Excuses
"There was a dead cat in the mailbox, so I couldn't send my check." If there is ever a contest for the most outrageous excuse for non-payment, Laura Pepper, director of corporate credit for Valspar Corp., should win, hands down, for her "dead cat in the mailbox" entry. . . . keep reading
EBPP: Service and Savings
Northeast Utilities (Hartford, Conn.), which has customers in Connecticut, Massachusetts, and New Hampshire, is in the process of rolling out the newest technology for utility billing--technology that is designed to offer benefits to the utility and its customers. What is it? Electronic bill presentment and payment (EBPP). Here you'll learn:
  • The key capabilities of the system - what customers can do
  • Northeast Utilities' primary motivations for making the switch
  • Specifics of their six-phase plan for rolling the program out
. . .
keep reading
Projection Model Helps Card Issuers Choose Customers
A tool is at your disposal to assist you in limiting your marketing efforts to only those customers who show the greatest potential for generating revenue in the next 12 months. This tool will also he . . . keep reading
Your Collections "Service"
Credit is a service you offer your customers. What about collections? That's a service too, according to Ralph J. Rimualdo, who is vice president of Case Supply Inc. (Syracuse, New York) and who w . . . keep reading
Is this a consumer or commercial debt and is it covered under the Fair Debt Collection Practices Act?
"You violated my rights under the Fair Debt Collection Practices Act," claimed Brian O'Clair. "You were collecting a debt that belonged to another bank, so you had to follow the FDCPA when you tried t . . . keep reading
Controlling Credit Abuses
Each year, companies extend billions of dollars' worth of free credit to customers who know they won't be required to pay on time. Here are several ways to control such problems: Before the S . . . keep reading
Everyone on the Same Page
"While we are not totally a service company, the products we sell are often comingled with other suppliers', and identification problems are obvious. But whatever the product or service that is provid . . . keep reading
A Follow-up on Guarantees, Corporate ...
"An important fact needs to be pointed out concerning the topic of corporate guaranties. "It is misleading to believe that one corporation has the legal right to unconditionally guaranty the payme . . . keep reading
Seller, Beware
"One of the ways that scam artists succeed is to furnish fraudulent financial information that looks incredibly good (beware of round figures). We always try to get an audited financial statement . . . keep reading
The "Late Night" Approach to Bustouts
"I would like to offer a 'Top Ten List' of ways to recognize that your organization may be dealing with a bustout artist when doing the credit review": 10. You have never heard of the organizations . . . keep reading
Listen to Your Hunch
"After getting stung a few times, our credit department took it as a matter of pride to identify the bustout before extending credit. To do so requires one to maximize his or her credit knowledge with . . . keep reading
Elements of a Good Credit Application
Before considering establishing an open account, almost every credit department asks applicants to complete and sign a credit application form and credit agreement. Many applicants would prefer to simply provide the credit department with a list of trade and bank references. However, a credit application should be much more than a form to gather bank and trade references. A well-written credit application is a contract between the buyer and the seller. A good credit application will benefit the seller, and a poorly written credit application will almost certainly benefit the buyer. . . . keep reading
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