It is a fact that
the number one problem in
the credit investigation process is that the information obtained is often
yesterday’s news. Simply stated it is historical. Having the most current
information about our customer would certainly reduce the risk factor. All
too often, regretfully, this is not the case.
Yet, every day credit professionals are
offered the opportunity to obtain the most current information about their
customers and they continue too overlook this opportunity to gather this
I was reminded of this recently when I
called one of my clients who was away from their desk and I was transferred
into their voice mail. This is what greeted me: “Hi, I’m sorry I can’t
take your call, I’m away from my desk, please leave your name and number
and a brief message and I will return your call. If you are calling for a
credit rating please fax your information to 555-555-5555 or email your request to
More often than not I hear credit
professional complain they do not have the time and in some cases the
inclination to field credit requests. Yet, what an opportune time to gather
the most current information about our customer.
The other party calling for a reference is
either a new vendor attempting to obtain information to open a new account
or an existing creditor updating their information. Regardless of the
purpose of the inquiry we have the opportunity to talk with another party
who has information that is current.
If it is vendor with a new application then
often they have the most current information available. The information we
should be asking from them in exchange for the information they want from us
§ Names of other creditors provided by the
§ Names of officers, owners
§ Phone numbers and addresses
§ Bank information
§ Legal entity of customer
§ Purpose and amount of credit
Often our customer changes vendors,
addresses, owners, officers, and legal composition without that information
filtering down to the credit department who often does not find out about it
until there is a negative transaction.
If the inquiry is an update on an existing
customer, this is an opportunity to discuss with fellow credit professionals
what their experience with the customer has been and most importantly the
reason for the update. All too often, unfortunately, customer accounts are
updated for only two reasons:
1. They or sales has requested an increase in
their credit line, or most commonly
2. They are past due and not returning phone
The function of credit management is to
support sales and minimize risk. Risk cannot be minimized with information.
We should never be “too busy” to obtain information about our customer
whether they be new or an old account.
80% of collection problems exist with long
time-established customers. The reason for this is because we tend not to
update our existing customers as often as we should. The number one reason
given for not updating customer files is time. Think about this, every time
we receive an inquiry for credit information that is an opportunity to
update a current customer.
Lastly, responding to credit inquiries
personally allows the credit professional to develop a network of contacts
that can be called upon for many reasons.
I wish you well.
information is provided as information only and not legal advice.
Legal advice should be obtained from a competent, licensed attorney,
in good standing with the state bar association.