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New account set up process

17/4/2015

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I am often amazed at how little thought and effort is put into this vital area of a business. We put huge effort and resources into prospecting for new customers, then the whole sales process and even customer service.

The job of opening the account is usually a clerical exercise that is stuck in somewhere in the middle, and in some cases is done at the last minute because someone, somewhere is looking to print a delivery docket to get the goods out of the stores or in the case of service to log a service call.


You would not hand €1,000 to a stranger in the street and hope to get it back, then why would you deliver goods or service to someone you don’t know without first checking who they are, what they are and if you can trust them with the goods or service for the agreed period?

Start with a proper New Account Application Form that asks the right questions and gathers the right information. (I am happy to help you with this if required).


Then you must have a process based on the amount of credit required, your profit margins, your place in the market, what your competitors are up to etc.

You need information before you can make your decision, look to the agencies (E.g.  Search4less for information you can buy at a very reasonable price to give you an up to date picture of them.(contact me for an invitation to see how this works)


Use trade references to find out how they are performing.
Get bank references.
Use the Companies Registration Office website (www.cro.ie)
Use your Credit Insurer to verify the limits you are looking for.
Use Google, Yahoo or Bing
Use The Irish Times or for overseas customers use ft.com – I know you can’t believe everything you read in the newspapers, still it will give you a picture of how they are performing. Are they expanding or letting staff go?


Have a clear communications map of who and when needs to be aware the account has been set up – the rep, the sales manager, the operations people, the service manager, the boss, the marketing department to apply pricing, bonuses or discounts, your IT department, the credit controller, the van driver… the better you communicate the better.

 This process is the root of all success and failure for your business. Make sure you take it seriously, make sure the people doing it fully understand what they are doing and the implications of their actions. 


Finally ensure there is some type of management review of all new accounts opened in a week or a month, you just might be amazed at the amount of knowledge that is untapped within your own organization.

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Selecting customers using credit as a driver

10/4/2015

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Some companies see their credit function at the end of the line in their business. First there is product development, then there is marketing, then sales and finally when everything is done and dusted the credit department step in to collect the money that is owed.

While this may work in some instances I believe your business would be better if you involved the credit team earlier in the process. Would you agree - there is no point selling and delivering goods that you are never going to get paid for. Then, is there any point in taking these orders and sending them into the office? So, is there any point to the sales rep wasting their time in pursuit of this customer and this order? If not would you have been better served to run a list of prospective customers past the credit controller on a daily, weekly or monthly basis? Tell the Credit Controller – “this is the list of 50 customers we are targeting next week, can you run a quick check and confirm the ones you would be happy to give credit to” (An indication of an amount of credit you would be prepared to extend would also be useful). This way the sales staff have a better understanding of the potential customer and is happy to know if an order is obtained it will be delivered, without hesitation.

The sales staff can also manage potential customers expectations, if they know in advance what credit will be extended or if cash on, or before, delivery is required.

Using this simple pre-emptive model can boost your sales and increase your profitable orders. It can also add to the level of customer service you offer by focusing on the customers that generate the greatest return. This approach can also increase your profits, as you become aware of high, medium and low risk customers you can adjust your pricing accordingly, obviously the higher the risk, the higher the cost of credit that has to be passed on to the customer, tracking this premium against your late payment costs and eventual write offs will prove if your strategy is working or needs to be revised.

If you involve your Credit team even earlier, the payoff will be even greater. Get your Credit & Marketing teams together when you are deciding on new markets, drill down to individual customers in each marketplace before the sales team make a single call, you can have your marketing plan completed and include potential customers you would be happy to deal with, who have the wherewithal to pay their bills in full and on time.


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    Author Declan Flood

    Lifelong Credit Professional dedicated to improving the standard of credit.

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