For many businesses selling goods and or services, providing a credit facilities to it’s potential customers is a critical for consistent growth.
Controlled credit facilities to customers is vital for sustaining continuous growth and profitability. On the other hand uncontrolled credit is an ingredient for business failure.
To design and establish an appropriate credit application a business needs to identify it’s needs. This is relative to how the business operates, in what industry, in what environment and with what it’s resources are.
A duly completed credit application is a fundamental requirement to establish the potential customers credit worthiness and in doing this will assist both the business and the customer alike. Debtors are one of the most valuable assets of a business and therefore must have adequate protection at all times.
The credit application needs to contain validated information that can be used at any given time to recover a debt in the event of a business failure or a customer not been in a possession to pay their respective accounts on time. The credit application should give the business all rights to recover debts owing to them when a debtor fails to meet their commitments.
Along with the businesses Trading Terms (ie: 30 days. 60 days) the business needs to establish a Credit Limit. This may be one the potential customers has requested or one the business has deemed to be appropriate at the time of the credit application being submitted. This will be determined once the fully completed credit application is processed