November 28, 2020  
 
Gaebler.com is a daily online magazine covering small business news. We help entrepreneurs transform ideas and innovations into greatness.

Articles for Entrepreneurs

 

Accounting for Entrepreneurs

 

New Account Credit Approval

Extending credit to customers is a common small business practice. But without a new credit approval form, you'll have a hard time keeping track of your credit accounts. We'll tell you the key elements to include in your company's credit approval forms.

You company can't avoid extending credit to customers, especially if you operate in a B2B sales environment.

Customer credit is commonplace in the world of small business but so are woefully inadequate credit analysis and tracking tools.

Comprehensive credit screening is a good first step in tightening up your company's financing program. Beyond that, you'll need to create a way to document credit approvals and record credit terms for each of your customers. New account credit approval forms are a written record of your credit relationships and the tool you need to maintain a watertight finance program.

The manner in which you design your new account credit approval form depends on your business requirements. However, a decent new account credit approval form should address several issues, including the following:

  • Contact information. Accurate contact information is a no-brainer for inclusion in a new account credit approval form. This is the place to record the customer's official business name, contact names, billing address, employer ID number and other vitals.
  • Sales representative. The credit approval form should also identify the sales rep who was responsible for landing the account. If there is confusion about terms, you will need to bring the salesperson into the conversation.
  • Delivery terms. The delivery terms section specifies your company's responsibility in providing the customer with the products or services that are being financed. This might not seem important now, but if the relationship goes south this information will have legal value.
  • Payment terms. Clearly describe the payment terms that have been specified in the contract. If necessary, go into excruciating detail to avoid a misinterpretation of payment requirements.
  • Special arrangements. If concessions or special arrangements have been made, make sure to include them on the credit approval form to keep everyone working from the same page.
  • Review & approval sign-offs. At least two sign-offs should be required on your new account credit approval forms. The first should be from the person who reviewed the customer's credit information and the second should be that of the person who was authorized to approve the request. Although a single signature would be easier, two signatures maintain appropriate checks and balances.

Related Articles

Want to learn more about this topic? If so, you will enjoy these articles:

Customer Credit Analysis
Monthly Cash Flow Projection


Conversation Board

We greatly appreciate any advice you can provide on this topic. Please contribute your insights on this topic so others can benefit.


Questions, Comments, Tips, and Advice  Code Image - Please contact webmaster if you have problems seeing this image code
Problem Viewing Image
Load New Code

 

 

Additional Resources for Entrepreneurs

Search Engine Marketing

Social Marketing Optimization

Business Forms

Business in the Jungle - Business in Fiction - Negotiating

Radio Ad Costs

Newspaper Advertising Rates

City-Specific Resources for Entrepreneurs

Small Business Insurance

Global Entrepreneurship

China & Entrepreneurs