Welcome to Part Two of our Commercial Credit Management Q&A Blog
The Topic to cover for this week is Automation of credit limit setting
Q: Our business provides IT support and equipment. We have a large number of customers with an increasing number of new customers monthly. We would like to automate our credit limit setting process as much as possible, we are thinking of automatically applying the credit Agency recommended limits for all customers and automatically increase up to 50% of the Agency limit after 6 months of positive trading history
A: I would look at automating part of your ledger rather than the whole ledger. To do this I suggest looking at where the greatest risk to your business lies, which I would assume is where you provide IT equipment which you buy in from a 3rd party, with support service being a lower risk.
To rationalise the process, I would advise that you have a limit on equipment costs, say £500 if that is an amount the business could safely carry as a bad debt, but any equipment orders over £500 triggers a Credit limit review of that account.
I also advise you ensure you have all your customers monitored with your credit reporting so you are alerted to any changes if your customers circumstances, which should also trigger a credit review. Click here if you would like a free credit report on a UK company of your choice. We can provide credit reports and monitor your customers for you and alert you of any changes. Please click here for details of our support service.
