The function of the credit application is
nothing more than a source of information. It is not a requirement of law but rather a
form a company chooses to use for the purpose of compiling necessary information to assist
in the evaluation of risk.
WHAT INFORMATION SHOULD BE REQUIRED?
The information found on an application for credit varies. I cannot recall
verbatim information being asked on the forms used by the various firms where I was
employed. Every firm had a uniqueness about what information was requested and where it
appeared on the form. Some were a single page and others up to as many as four.
ALL APPLICATIONS SHOULD REQUIRE THE FOLLOWING INFORMATION:
Legal name of the firm - (especially when dealing with proprietorships &
Legal entity of the firm - (there are only four; proprietorship, partnership,
corporation and limited liability company).
Their street address - ( a P.O. box is fine for billing purposes but the
business is not located at the post office).
Names of persons authorized to purchase -( proprietor, partners &
officers names are easily attainable through a variety of sources, such as your sales
team, but only the firm can inform us who is authorized to purchase).
Telephone number of the purchasers - ( often these folks have direct
telephone numbers which tend not to be the same numbers usually provided on the
When they pay bills - (this information is vital for collection purposes).
Professional license numbers - (if applicable) : contractors, DEA, bar
Landlord information - if they are renting or leasing.
Trade and bank references - ( self explanatory )
Line of credit requested - This is important to ask because it gives us an
idea of how much time will be spent assessing the risk. We should not be devoting the same
amount of time investigating a $5000 credit request versus a $50,000 credit request.
More on this subject next week. I'd like to hear your comments regarding the
above, including any disagreements you may have.
I wish you well.