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Oct 01 2014 Setting Proper Credit Limits |
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How many of us have had to deal with customers going over, doubling or tripling their credit limits?
Yep, that's what I thought, all of us.
How can we make sure that we have realistic expectations of credit limits per customer?
A few things we can do to make sure our customers' credit limits are where they need to be are as follows:
1) Look at their past history. This is a great indication of where they have been and what they will potentially need. 2) Ask references what their experience has been. If other companies have the same customer and are willing to share the information, we can use that to determine the proper limit. NACM Trade Groups are great for this. 3) Talk with your salesperson. They have an idea of what your customer will be doing in the future. 4) Ask the customer. The customer knows better than anyone what type of work is coming up. They may be trending toward doubling purchases in the next year and this can give you a head start on the credit investigation to see if a higher limit will be allowable. 5) Pull NACM and other credit reports. This will allow you to see how much other vendors are selling to your mutual customer.
Gathering as much information as you can will help you establish a realistic expectation for your customers limits.
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