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Business Credit Concepts All Articles • Home |
Even COD (cash on delivery) customers should be assigned credit limits commensurate with the risk that the customer's check[s] might bounce. Credit professionals need to qualify COD customers for a specific COD credit limit. How? One source is credit reports. Review credit reports to see if other creditors are paid as agreed, or alternatively may have placed the account for collection or filed suit over one or more NSF checks.
An experienced credit manager will also request a bank reference and contact the applicant's bank before making a decision about offering COD terms.
Creditors that do not take the time to qualify companies for COD terms will have more NSF checks returned and [unfortunately] more bad-debt losses than companies that establish dollar limits on all customers including COD customers.
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