Commercial Credit and Your Competitive Advantage

What you’ll learn

  • Discover how to eliminate delay in new credit and order approval.
  • Understand the steps to efficiently shorten the order-to-delivery cycle.
  • Learn how to automate the Credit Application Process.
  • Avoid multiple Debt Exposure by accepting multiple forms of Payments.


We live in a fast-paced world. Corporate credit should therefore not overlook the need for speed. If your firm can deliver goods and services faster than the competition, you already have a leg up and can expect to bring in even more business. By eliminating delays in the new credit and order approval processes, you shorten the order-to-delivery cycle and increase your customer satisfaction and competitive advantage. Here are eight steps to cost-efficiently shorten that cycle without increasing risk.

#1 – Move Credit Applications Online
The biggest consumer of time in any office these days involves handling paper documents. Credit applications are a good example of a document requiring too much time for the sales and credit staff to acquire and process. An online credit application ensures accuracy and creates a file any authorized party can easily access. It also enables sales to get it filled out while they are with the new customer so there is no delay in getting it back to the credit department.

#2 – Automate the Credit Application Process
An online application is a nice start, but if the information it contains can’t be extracted and integrated into the A/R master file, it cannot realize its full potential. You also get an added plus by tying online applications into an automated account approval process that includes workflow and analysis tools.

#3 – Create a Single Screen for Reviewing Customer Status
When manually approving orders, you should never be more than one mouse click away from a summary of customers’ credit and A/R status. Credit personnel spends a lot of time even in partially automated environments, checking on multiple sources of information. The ability to quickly pull up customer information and check AR and payment status should be available at any step in the order-to-delivery cycle.

#4 – Automate Order Approval
Studies also show credit departments spend an inordinate amount of time approving orders. Software algorithms should be used to route orders for automatic approval within pre-set parameters. The idea is to eliminate all the orders that land in the credit hold queue that is quickly released after a cursory manual review.

#5 – Use Credit Score to Approve Small Orders
Credit scores reveal trends and can predict delinquency or default, especially when applied to small orders that do not warrant the costs involved in full-blown credit evaluation. Also, a credit score purchased from a bureau is less expensive than a standard commercial credit report, especially if it is captured electronically and stored in the customer AR file as opposed to a printed credit report. Those customers with scores above a pre-defined threshold can then be granted automatic approval while those that are clearly substandard can be offered cash terms. Only the marginal accounts may require manual review, which is facilitated when the analyst can work with electronic records instead of paper documents.

#6 – Download Credit Reports Directly Into Credit Analysis Software
Along the same lines, a credit report that exists as a paper document or even a PDF file is inefficient. Credit analysis software that captures the data on a credit report so it can be used within your systems to drive actionable intelligence is the way to go.

#7 – Consider Foregoing Trade References
Trade references are of marginal value because customers tend to list only the suppliers they pay promptly. Payment histories from a credit bureau or industry credit group give a much more accurate picture of a customer’s payment habits and are best captured and stored electronically.

#8 – Accept Multiple Forms of Payment
Give your customers the option of paying via credit card or ACH. Any transaction fee associated with these payment methods is worth the cost by saving you from the processing costs associated with checks, avoiding potential debt exposure and getting you your money faster, usually within 48 hours.

Has your company discovered other ways to shorten your credit approval process?

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