Magazine article Business Credit

Personal Visits and the Three C's of Credit

Magazine article Business Credit

Personal Visits and the Three C's of Credit

Article excerpt

The idea of visiting customers is controversial. Personal visits are often time-consuming and expensive, and unfortunately, sometimes considered threatening by customers and the sales department. But, they are vitally important to the credit department's role of managing risk--providing information, insight, and perspective that may not otherwise be available. The visits also allow credit managers to build a rapport with the customer.

Gather enough information to evaluate the three C's of credit: character, capacity, and capital. Here are a few techniques to gather information efficiently with a minimum of trauma to the business relationship.

* Make an appointment with a decision maker. Confirm it in writing. Include a proposed agenda with the letter. Ask the customer to contact you if they find any part of the agenda unacceptable. If any documents need to be reviewed, state the request clearly in the confirmation letter.

* If there are disputed items, be certain to send copies of all relevant documents--even if they have already been sent.

* If part of the visit involves collections, be certain to send copies of the invoices with the letter. Sometimes, you get paid as soon as your meeting begins.

* Confirm your appointment.

* Review the customer's credit file.

Start Evaluation Beforehand

Begin the credit evaluation by driving around the building to make a general assessment. Once you arrive, ask for a tour of the facility and note the upkeep here as well.

At some point during your visit, look at inventory. Ask a few simple questions or observe what is in stock to find out who the customer's major suppliers are, and how important your product is. With this in mind, ask for a list of the customer's trade references. If your company's name appears, you may be able to use this as leverage for more prompt payment. …

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