Customer visits can provide the credit department with significant and valuable information about a business and its operations. The credit professional receives a firsthand glimpse into the customer’s facilities, such as their inventory, condition of equipment, and location. Personal visits may also create and help build long-term relationships with the customer. On the flipside, a credit professional should be alert to the attitude the customer takes during the visit and note any red flags. Therefore, results of customer visits should be fully documented with key information highlighted. Below are four main objectives of a customer visit that a credit professional should take into account.
A customer visit can include representatives from both the credit and sales department, and may also include other members of company management.… Read the rest
Financial statements play an extremely important role in the day-to-day operations of a business. The balance sheet provides a snapshot of the company’s financial statement, while the statement of cash flows shows its operating expenses. It is vital for a credit professional to review and understand these documents. The credit manager should also be aware of the 10 associated elements in financial statements that relate to measuring the performance and financial position of the business.
- Assets—All of the resources owned, or in some cases controlled, by a company or a person
- Liabilities—obligations, debts, and items that are owed by the business
- Equity—assets minus liabilities
- Investment by owners—an increase in the equity of the business; something of value is transferred to the business to obtain or increase ownership interest
- Distribution to owners—a decrease in the equity of business after assets of some kind, such as cash, are transferred to the owners
- Comprehensive income—all of the changes in equity during a stated period, except changes from either investments by or distributions to owners
- Revenues—cash or other items received by the business in exchange for merchandise or services rendered
- Expenses—the amount of assets or services spent or used
- Gains—increases in a company’s equity from non-operating business transactions, except those that stem from revenues or investments by owners
- Losses—decreases in a company’s equity from non-operating business transactions and other occurrences, except those that stem from expenses or distributions to owners
Source: NACM, Principles of Business Credit
Posted January 2016… Read the rest
We had a blast at the Holiday Open House a few weeks ago! Thank you for everyone who came to join the fun. We look forward to seeing everyone next year. Play the video below to see all the fun and excitement!
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Credit investigations on a customer don’t end once an application is approved and an account is established. Every company’s credit policy should include procedures for updating customer credit applications periodically, keeping in mind that certain specific events should trigger an immediate reevaluation.
When to Investigate an Account
It is recommended that credit applications be updated whenever there is a change in the credit grantor’s policies or credit terms or at certain timeframes such as annually or every three or five years. In the process of verifying information, the credit professional should take the opportunity to review the contents of the file and archive or destroy outdated or irrelevant materials. This will prevent duplication and oversight and make it easier to find items when they are needed.… Read the rest
By Wes Friesen, CCE, Portland General Electric
“Sow a thought and you reap an act; sow an act and you reap a habit; sow a habit and you reap a character; sow a character and you reap a destiny.”
Right in the middle of the quotation above is the importance of our habits. A habit is “an acquired mode of behavior that has become our common practice.” Our habits mold our character and ultimately determine our destiny in the world. Want to further develop your character and develop into a highly effective manager? Intentionally pursuing and building worthwhile habits is the key.
Following are ten of the habits of highly effective managers. This is not an exhaustive list – but these will build a strong foundation on your road to increased management effectiveness:
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- Habit #1: “Expanding Self-Awareness.”
By: Wanda Borges, Esq., Borges & Associates, LLC
The diligent credit executive must be ever mindful of the multiple functions that can be performed by a well-drafted credit application. A credit application is not only a useful source of information for evaluating the prospect’s credit, but also provides a wealth of information that can be used to collect your company’s claim from a customer that later hits dire financial straits. Under the right circumstances, a credit application can also become a binding contract.
With many companies now utilizing an online or electronic credit application, credit grantors need to determine the intended purpose of the online or electronic credit application, and whether that online/electronic credit application can be enforceable in court.… Read the rest
The Middle East and North Africa (MENA) region is notorious for its instability, yet this should not automatically eliminate the consideration of doing business there. In fact, opportunities for growth exist in these markets, if you and your company go in prepared.
Take time to gather and assess available information about the prospective customer(s) and the country and region in which it operates to get an estimate of the level of risk. Information includes financial statements and country-based risk assessments that cover such things as the current political environment, corruption, and terrorism. You may find, on one hand, that a company has a sterling payment record, but government instability (potential for rebellion, civil war), frequent destruction of property/sabotage, or an inability to get money out of the country are too concerning to ignore.… Read the rest