How to decide when to say "yes" to a credit applicant-without jeopardizing your reputation or your company's bottom line Deciding whether a credit applicant is ultimately creditworthy involves more than just poring over their financial statements-it takes the kind of advice only an experienced credit expert, like Hal Schaeffer, can give. A 28-year veteran of the credit screening process, Schaeffer outlines the nuts-and-bolts of assessing a credit applicant's financial health and ability to make good on a line of credit. In part one's clear, four-part "A, B, C, D" format (A is for Analysis, B is for Building Essential Business Credit Information, C is for Considering All Factors,and D is for Decision), the author examines a prospective borrower from every angle, using formulas, checklists of what to look for, and available outside information sources (from Dun & Bradstreet to the Internet) to get a genuine picture of an applicant's current finances and degree of credit risk. Also outlined are the financial, credit, and business factors that go into a "sound business credit decision" a guideline for consolidating facts to vindicate your decision, as well as a series of twelve chapter-length case studies (contained in part two). Discussion includes:
* Determining the cost and accuracy of financial information
* Isolating information gaps in financial records
* The actual costs (including total/partial loss of sale, insurance fees) and value (including future sales to the customer) to your company if credit is extended
* The exact nature of the sale-large (or small); one-time deal or continuous; the expected profit margin
* The controls your company has over the customer
Complete with twelve chapter-length real-world case studies of problems typically encountered (with detailed solutions), Credit Risk Management offers practical, no-nonsense advice on how to minimize the risks-and maximize the benefits-to you and your company when you finally say "yes" to an applicant.
Table of contents
STEPS FOR A SOUND BUSINESS CREDIT DECISION.
A Is for Analysis for Creative Credit Management.
B Is for Building Essential Business Credit Information.
C Is for Considering All Factors That Impact the Business Credit Decision.
D Is for Decision (or Recommendation).
Case Study 1: Sure Progress, Inc: Creative Alternatives to the Direct Extension of Credit.
Case Study 2: International Exports, Inc: Creative Methods to Reestablish Open Account Credit with a Former Problem Customer.
Case Study 3: Special Materials, Inc: Business Issues and Costs That Effect a Sound Business Credit Decision.
Case Study 4: Fast Action Suppliers, Inc: Preserving a Company's Reputation That is Tarnished by a Customer's Slow Paying Practices.
Case Study 5: True Delivery Seals, Inc: Minimizing Exposure to Loss Due to the Cancellation of a Distributor Contract.
Case Study 6: First Choice Company, Inc: Dealing with a Last-Minute Credit Decision.
Case Study 7: Perfect Image Suppliers, Inc: Addressing a Customer with an Overbearing Attitude.
Case Study 8: Basic Needs, Inc: Considering Increased Credit Limits for Existing Customers.
Case Study 9: Drugs "R" Us Products, Inc: Addressing a Customer's "Shady" Past.
Case Study 10: Freezy Refrigerator Repair Co: Addressing the Problems with the Sale of a Service.
Case Study 11: Terra Technology, Inc. The Risk of a Custom Order Sale.
Case Study 12: Compania Swift, Inc. The Sale of Goods to Foreign Customers.
"I recommend it to credit professionals who want to move from the back office to the front office" (Credit Focus, Summer 2007)