Credit Control

How do you assess your customer's credit risk?

• Ensure your customer completes a credit account application. [Click here to view sample credit account application]
• Carry out a credit check. Credit checks can be purchased from www.ykcreditcheck.co.uk. This site utilises the largest UK credit check database to provide you with up to date reports on any UK business
• Set your credit terms once you have received the report and credit application form back.
• Send a letter to your customer once the new account has been opened. [Click here to view sample letter]
• Consider joining credit circles and other industry groups. Credit circles basically are closed industry groups, open to invitees of similar industries or businesses, passing confidential information amongst themselves concerning prospective customers. The Credit interchange offers this facility over the internet and its services are entirely free www.creditinterchange.com
• Once a credit risk has been established there should be some objective criteria within your organisation to allocate a risk category to each customer. Such risk categories can be categorised as follows:-
  
  
  1. No risk - this could apply to Government departments and blue chip companies.
  2. Standard trade risk - this will include all those not included in categories 1 and 3. Limited companies, partnerships and sole traders having a sound financial backing will form part of this category.
  3. This will be high risk customers and could apply to, for example, customers who are always late in paying their accounts or those who have judgements registered against them.

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