How to setup a credit management procedure?

a)Screening customer’s basic information in a fast and effective way can help to decide whether credit can be granted and whether it deserves to investigate further. A grading system can be used to calculate financial ratios to evaluate customers’financial status or payment ability.

b)Credit research is to through various channels investigate the customer’s history (generally for 3years), the validity of the information provided, the record of payment and the willingness to make payments.

c)Credit decision is to decide whether credit can be granted and, if yes, the credit amount.

d)Credit control is to supervise the accounts receivable of customers, update customers’ information to ensure customers’ credit amount is geared to customers’payment ability.

e)Collection in time is a very important step for credit management. You should take whatever means such as sending invoices, making phone calls or taking legal actions to collect overdue accounts. Generally speaking, the longer the accounts receivable is, the harder the amount is to collect.