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credit limit

Now you’ve taken an order but your supplier does not want to extend a credit line.

March 15, 2010 by admin Leave a Comment

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This is one of the more frustrating things that you can encounter as a business owner. You or your sales person has gone out and “won the battle” by bringing back a good sized order, and now the credit person on the other end of the phone does not want to extend terms or enough credit line to cover the business. The first reaction is to call up and vent on the credit person, but this, as we have discussed earlier, is not in your company’s long term best interest. The first question many business owners want to ask is “why,” but it is probably more important to ask “who.”

Why is a question that leads to debate and confrontation while who gives a business owner what he or she might need-more information to get a review or reversal. Was the decision made by a credit manager, senior credit analyst, or accounts receivable clerk? If it was a clerk, they might be following a strict set of guidelines and are not encouraged to think “out of the box.” Same thing for a junior credit analyst, they do not have years of experience to draw on to get the deal done or be experienced enough to offer creative financing. Your first step is to call your liaison with your suppliers company-your sales person. Make sure you get the name of the person making the decision and ask the sales person their job title. Your sales representative should be able to convey how much clout the person making the decision has within their organization. Many sales people (who want the sale) might make a visit back to the credit department for you. A few hours later the deal might show up totally approved! (By the way, even finance people have a heart; I approved a deal that I knew I should not have. The sales rep told me,” Without this deal my kids won’t get Christmas.” What would have you done, probably what I did-approved. Boy was I hating life about March when the company could not pay-the key thing- this deal was approved and it was nothing about business or credit analysis).

If the deal is quashed by a Senior Credit Analyst or Credit Manger who is much respected inside their own company for years of prudent judgment, then make them your ally-ask them to draw on their experience to help you get the deal done. Remember without A/R these people don’t have jobs, so present yourself as a cooperative potential customer needing their expertise. They will begin to like your approach immediately. They might offer to finance half the deal with the other half on American Express. If after 5 deals-paid with in terms, then they will offer a total credit line of x amount. Also ask them if they report to D & B or TRW business reporting, and if they would do this for your company. Most will be glad to help!


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Tagged: credit cards, credit limit, finances, small business

Credit Card Companies Saving Themselves

November 14, 2008 by admin Leave a Comment

Today credit card companies are doing more and more to try and save themselves from the crisis that is effecting so many of our financial intuitions. But in reality they may just end up losing and hurting their customers. The latest scheme now being used by some credit card companies involves watching where and how you use your credit card. When they observe purchases that they deem to be a characteristic of a risky customer they play to lower you credit limit and even possibly closes your credit card.

As credit tightens the credit card companies only want to give credit to the people that are 100% sure to be responsible customers and pay back their debt. They will also keep track of what you say when you call the customer service number in order to figure out if you are a risk for the company or not. The top places that could hurt you when using a credit card are: Bars, nightclubs, gambling institutions, cash advances, charging the necessities, marriage counseling, and massage parlors and strip clubs.

The credit card companies are now starting to look at the lifestyles of their customer and decide whether or not they are the type of customer they want to do business with. Not all credit card companies are of course adopting all of these tactics but the trend is disturbing. For example Visa may not have the same list of purchases that are disapproved of as American Express, and the next company may have no such policy at all. Each company is developing their own model that they go by to determine what and who is a risky customer making risky purchases.

Tagged: credit cards, credit limit, customers

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