It is important for the credit department to look for ways to streamline
the order review and approval process. It is equally important for
the credit department that review and approval of pending orders be
given top priority. There are a variety of techniques to accelerate
and streamline the approval process for orders placed on credit review
Arrange for someone to modify the software that your company uses
so that orders are not placed on credit referral if there is only
a small dollar amount past due. An example would be to modify the
software so that orders do not go into credit review [sometimes
called erroneously credit hold] until the past due balance exceeds
the total A/R balance.
Consider whether or not orders for certain low risk accounts should
be allowed to bypass the credit approval process altogether. Most
companies have a limited number of strong, stable, large and creditworthy
customers that should be allowed to bypass credit approval.
Another idea is to allow all orders for low risk accounts to bypass
credit review and approval process unless the order pending would
place the account over the established credit limit by a specific
dollar amount or percent of the credit limit.
Consider modifying the software so that orders are not held when
the past due balance involves disputed balances - such as outstanding
It may take some time and effort to modify your software to accommodate
these change, but I am convinced that the time and effort required
to do so will be more than offset by the benefits of being able to
process orders more quickly.
One final thought: To prevent problems before they can happen, notify
your salespeople of the credit limits established for each of their
customers. Invite them to study the report and request increases before
the customer exceeds the credit limit. This will give the credit department
time to update the file - and hopefully avoid the problems associated
with having to hold an order while the account is evaluated for a larger
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