Credit Check

Re: [spiers] Credit Check

Does anyone have advice on how exactly you check a customer's (Net
30 terms) credit? We have credit reference sheets with
bank/reference contact info but not sure exactly which of them we
call and what to ask specifically? What is standard for checking a
new customers credit?


I spent 2 years checking credit way back when working my way up in an import
company. It is an art ini its own right... your job is to avoid 2nd rate
customers. Not everyone who orders from you will be a good customer. maybe 10%
you should not ship to.

The reference sheets i am guessing your reps have, unless you made them up
yourselves. the sheets have all the custoemrs relevent info, plus bank
references, and then references of otehr companies that are in effect your
competitiors.

competitors are your best source of credit check info.

Do NOT check Dun &Bradstreet...most of your customers will be small biz and D&B
is useless for these stores.

Do NOT check bank references...banks either don't reply or don't give usefu8l
information (take the custoemrs bank reference, if only because you'll have to
explain why not if you don't)

that leaves the names of other companies like yours the customer buys from.

never call or email...

the best way is a note with a self addressed stamped envelope identifying
yourself, stating that the custoemr used this company as a reference, and you'd
like 3 bits of info:

1. how long has the customer been a customer of the competitor?

2. How long does it take for the custoemr to pay?

3. What is the credit limit on the customer.

usually people ask for 3 references, I ask for five.sometimes the custoemr will
check moff a dozen names oon the reference sheet, i'd check about 8.

of the 5 you send out, you are lucky to get 3 replies in a timely manner. With
those replies, you make a decision.

never go COD, ever.

Take credit card payments if you can.

if credit is iffy, ask for prepayment, the custoemr will say no, and that is
good. You avoided an iffy customer.

This is a key area, just be cold blooded, and expect to lose some of those
orders.

John

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