Credit recovery solutions, in the context of this post, start with the credit application. A strong credit application helps creditors make better credit decisions, gives collection agencies useful information if an account goes past due, and can improve collection leverage. The post also notes that updating applications over time helps keep customer information current and supports accounts receivable procedures.
- Credit collection work begins before an account goes past due, at the credit-granting stage.
- A well-written credit application can support both credit decisions and later collection efforts.
- Updating credit applications periodically can help businesses stay current on customer changes.
Frequently Asked Questions
What is the role of a credit application in credit recovery?
A credit application gives the creditor more information to use when deciding whether to extend credit. If the account later becomes past due, the information in the application can also be valuable to a collection agency. The post presents the credit application as an important starting point for collections and recovery efforts.
Why are credit applications important for collections?
The post says credit applications can give collectors a tremendous amount of information and leverage. That information can improve the chances of collecting on past-due accounts. In other words, the application supports collections by providing useful customer details before a problem occurs.
How can updating credit applications help a business?
Updating credit applications periodically can help a business stay aware of changes in its customer base. The post says this helps keep you abreast of changes in the structure of your clientele. It is a practical step for maintaining current information within accounts receivable procedures.
Do collection agencies use credit application information?
Yes. The post states that if a new customer ever goes past due, the information in the credit application can be invaluable to a collection agency. It suggests that well-written applications provide collectors with details that can improve their collection efforts.
How should credit applications fit into accounts receivable procedures?
According to the post, credit application processes should be part of internal collections policies and procedures from the very beginning. They are used when granting credit to a new prospective customer and can also support later collection activity. The post encourages businesses to use them as part of A/R procedures.
Did you know…Credit Application
Internal collections policies and procedures actually BEGIN with the process of granting credit to a new prospective customer? Making use of a robust credit application (download a sample application here) during this process can serve a number of valuable purposes. For instance:
It gives you (the creditor) more information on which to base your credit decisions.
In the event the new customer ever goes past-due, the information contained within the credit application can be invaluable to your collection agency.
Updating credit applications with your existing customer base periodically can help keep you abreast of changes in the structure of your clientele.
Did you also know…
Credit applications originated within collection agencies? The typical information provided by a well-written credit application can give collectors a tremendous amount of information and leverage that can drastically improve their chances to collect on those past-due accounts. Knowledge is power and never more so than in today’s economic environment.
What’s your take?
Does your company utilize credit applications as part of its A/R procedures? If so, how have they helped your business and what are the steps you typically take? Share your thoughts with us using the link below!