According to Credit Today's benchmarking survey on credit applications, incomplete applications and missing signatures are the primary challenges in credit app process.
Another big challenge involves the credit reference checking process.
Tied into both of these issues is the challenge of turning around credit applications in a timely manner, especially when orders have already been booked. On more than a few occasions, the sales department was brought into the conversation, both for good and bad. In addition, other respondents are challenged by the automation of the credit application process, compliance requirements, credit bureau report quality, getting financials, etc.
We may have not have captured every challenge related to credit application processing, but we think the following list provided by our survey participants is as comprehensive a list as you will find anywhere. You will also find some great tips related to how credit pros are dealing with the challenges they face.
Incomplete Applications
"Getting them to fill it out completely - Being able to check their credit without them signing the Credit Records Release. I will call the customer and ask them to finish the application or it will be rejected and the account will be setup with COD terms. In regards to checking their credit without the signed Credit Records Release, I will pull a report from the reporting group I use or I will contact the members of my NACM group to get their credit experience with this customer."
- Cynthia Wheeler, Credit Manager, CFM Distributors Inc.
"Incomplete information -- they usually give phone but not always fax numbers for references. I push back to Customer Service to get fax for all references."
- Chris Finch, Credit Manager, Sumitomo Electric Lightwave Corp.
"Incomplete applications...must go back to customer to complete."
- Patricia Dolceamore, Credit Manager, Visual Sound, Inc.
"A lot of times the credit references provided are unreachable or they refuse to share. No financials provided unless requested again. No signed and dated resale permit provided unless requested. No recourse but soft reminder consistently to the customers."
- Meena Navani, Credit Manager, Infantino, LLC
"Due to the credit application being two pages, getting both pages back and filled out correctly is a challenge."
- Candace Price, Regional Credit Manager, Louis and Company
"Our application is three pages, and getting the applicant to return all three can be an issue. If the application is incomplete, we let both the account and the salesperson know what is needed."
- Linda Olsen, Credit Manager, Norman S. Wright Mech Equip Corp
"Getting the completed credit application back and having them agree to our terms."
- Darrell Kiggans, Credit Manager, Kurz Transfer Products
"Making certain that the Application for Credit is complete without Terms and Conditions paragraphs 'lined out' by the customer. Having the sales person assist to make sure the application is complete."
- Thomas P. McFadden, Director of Finance & Credit Operations, Distributor Service, Inc.
"Getting accurate and complete information - we email requests for complete information when it is incomplete and we pull a large variety of reports to verify information included on applications."
- Brenda Keener, Credit Manager, Gulf & Basco Corp.
"Incomplete information - we are training sales to get complete information."
- Dan Sproat, Corporate Credit Manager, Wholesale Fuels, Inc
"Larger companies refuse to fill them out."
- Michele Donnelly, Customer Accounting Manager, Eagle Ottawa, LLC
"Our primary challenge is just getting a correctly completed application. The way that we combat this is we allow for a 21 day window once an order is placed for the customer to get the application into us, if they do not do so, the orders are automatically cancelled."
- Candice Lombard, Credit Manager, LIJA
"We will not set the account up without the application"
- Sherry Voyles, Financial Service Manager, Oriental Weavers USA
"Editing of the terms and conditions of the credit application"
- Laura Valley, Credit Manager, NCI Building Systems
Missing Signatures
"Getting a signature on the larger department store type accounts"
- David Dungan, Director of Credit, Justin Brands, Inc.
"Incomplete. Officers do not want to sign. LLC'S are often highly volatile when asked for a personal guaranty."
- Anonymous
"Getting everything completed and signed. At our company sales and credit work well together for the greater cause - our salesmen know if the application is not completed and signed, the account will not be opened."
- Jeanne Sumner, Credit Manager, Willert Home Products
"Credit Applications are incomplete and/or not signed by authorized officers of the company. Customer is contacted and informed that the application is not going to be processed without the missing information."
- Eva Smoluch, National Credit Manager, Strongco, L.P.
"We can't get most companies to even fill out a credit application. Most just send a reference sheet. If the amount is large, I will insist on a signed application and generally get the salesman to obtain it."
- Marcia Burgasser, Comptroller, American Douglas Metals, Inc.
"Getting the original signed document - getting the personal guaranty signed."
- Tom Berry, Credit Manager, Angelus Block Co., Inc.
"Getting signatures of officers, especially on personal guaranty"
- OB O'Brien, Credit Manager, Prowista Specialty Foods, Inc.
"People not signing the personal guarantee - we send it back with a letter asking them to reconsider and sign."
- Jaco Kruger, Director of Financial Services, William M. Bird & Co.
"Getting completed, signed applications -- we are educating the sales force and customers."
- Edward Terrell, Credit Manager, Easton Bell Sports
"Getting the personal guarantee signed. No personal guarantee, no credit. I simply state: You are asking us to stand behind your corporation, we are asking you to do the same. If you lack the confidence in your business's ability to pay; that tells us we shouldn't either. We may lose some new customers; but we would rather not take that risk."
- Tammy Adams, Credit Manager, Economy Lumber Company
"Getting the credit application returned and signed in a timely manner"
- Jill Escoto, Corporate Credit Manager, Davis Wire Corporation
"I do not have a problem processing credit applications once I get them back...the problem is getting new customers to fill it out and sign it. They do not like to be bound by our terms and conditions listed on our credit application."
- Cynthia Piper, Credit Manager, CSC Worldwide
"Getting the personal guarantee."
- Diane Lukins, Assistant Credit Manager, Village Nurseries
"Large businesses do not like to sign a terms agreement. As a result, sometimes we are forced to make exceptions."
- Cindy Hayes. Credit Manager, NICOR Inc.
"Getting the application signed and not have anything crossed out"
- James Ling, Credit Manager, Kal Tire
"Submitting their own standard reference sheet rather than our application - we simply state that credit terms will not be considered without a signed credit application. It's rare when companies do not comply."
- Diana Tapelt, Credit Manager, Minvalco Inc
"Obtaining proper signatures - we return the applications to sales until they are completed accurately."
- Gregg Bostick, Credit and Accounts Receivable Manager, Mayfield Dairy Farms, LLC (division of Dean Foods)
"Customers that do not want to sign our credit application; they are sending us their 'own;' we refuse and they have no choice but to respect our companies' policy."
- Lyne Boulay, National Director of credit and collection, Transcontinental Inc
"Some customers refuse to sign the application so we have a plan B."
- Michelle Bennett, National Credit Manager, Pregis Corporation
"Getting people to sign guaranty - if needed, we don't assign credit limit until the signed guaranty is received. Larger companies don't feel they need to complete credit applications."
- William C. Edgar, CCE, Director of Credit, Zippo Manufacturing Company
"Getting people to sign them. For some reason they do not think that they need to sign them."
- Bambi Fisher, Accounting Manager, Lowry Computer Products
"Second challenge is to get the prospective customer to sign our credit app without deleting our security agreement that allows us to file UCC. We sometimes allow them to delete if the company is not a high credit risk."
- Minnie Morrison, Credit Manager, CompuCon Systems, Inc.
The Sales Factor
"My greatest challenge is our sales team. If they bring a credit application from a potential new customer it always seems to have less information than an unsolicited credit application."
- Rob Ricardson, Credit Manager, The Corken Steel Products Company
"The biggest challenge is my company's salesman not asking for and making sure all the information requested on the credit application is completed and obtaining signatures, like when the salesperson does not obtain a personal guarantee from a financially responsible person when it is a Corporation or LLC. The lack of information hinders the speed the application could have been processed and may result in a credit limit less than the customer should have been given (thus, reducing sales and profits)."
- Robert Simmons, Credit Manager, Western Milling, LLC
"Complete information from the sales representative. Credit reference responses."
- Dianna Sweeney, Credit Manager, Distribution International
"We didn't always require a credit application like we do today. We have 10 divisions and whenever one of our existing customers wants to open an account with another division, we use this as an opportunity to get a credit application for our files. Our challenge is our sales staff- they do NOT want to have to ask for a credit app for an existing customer. They say that since they are a customer, we should open accounts for them for whatever division they want and not force them to ask for a credit app. They say it can be a deal breaker."
- Gayla Helmke, A/R and Credit Manager, Walman Optical Company
Reference Checking
"No response to vendor trade reference requests - we ask our prospective customers to contact their vendors and ask them to reply to our requests."
- Matt Yates, Credit/Collections Manager, Applied Computer Solutions
"Banks that do not respond or want to charge us for the reference - depending upon the amount of credit line requested we may waive the bank reference for low dollar accounts."
- Diane Patterson, Payroll/Credit Manager, The Hamilton-Ryker Group, LLC
"Time involved to send out and review references - can it be done through our offices in India? Also, the availability of Financial Statements."
- Gordon Miller, General Credit Manager, ISP Technologies
"Incomplete information and banks requiring us to pay a fee to receive a bank reference -- We request that the customer provide updated information and that they arrange with their bank to provide us with a bank reference."
- Laura Ann Watson, Cash Application/Tax Supervisor, Yokogawa Corporation of America
"Credit References being returned in a timely fashion - we now email a lot more than in the past. Often, companies are too new in business."
- Lisa Childress, Corporate Credit Manager, Bison Building Materials
"Not enough time for checking the references. To address this, we do not check them on any new account under $500."
- Mike Hopkins, Credit Manager, Paramount Apparel International
"Getting through to the references listed and getting the bank to answer…also, getting customers to sign the application. Sometimes send form to customer to sign, telling bank to answer, more than one contact to references, and sometimes asking for new references names from customer. We usually return the application for signature through the sales rep."
- Arrel Tucker, Credit/Collections Manager, Paramount Farms
"Getting trade references and banks to respond promptly -- we alert the customer after third request to reply."
- Chris Chaille, Credit Manager, Oil Distributing Company
"More and more banks are charging fees for ratings and turn around times are being stretched out."
- Mary Lynn Jordan, Credit Manager, Projections Unlimited, Inc.
"Getting references -- we keep sending them out. Call referred company and request response. If unwilling, I ask for new references. Financial statements are hard to get as competitors will sell without them. I keep asking. The worse they can do is say no."
- Cheryl Fischer, Credit Manager, Barber Glass Industries Inc.
"Lack of Bank References - Reluctance to supply Financial Statements -- we use reports from two credit bureaus as well as Trade Group Reports."
- Myron E. Huffman, Director of Financial Services, Monrovia, Inc.
"A number of vendors will not provide a reference. I've advised the prospective customer that without sufficient credit history, open account may not be approved. This usually prompts a reply from some, if not all of those vendors who would not previously respond."
- Melody C. Hogston, Credit and Collections Manager, Royal Mouldings
"Competition rejections of reference requests - In addition, confidentiality agreements in place between a bank and our potential customer"
- Jim DuBrava, A/R Manager, P&F USA, Inc.
"Getting reference responses -- we tell the customer their references are not responding, and so holding up the process"
- L. Richard Heavener, CCE, CEW, Vice President -- Credit, American & Efird, Inc.
"We require credit reference information equal to the credit line we are asked to set."
- Bob Unrau, Credit Manager, Bridgestone Americas Tire Operation, LLC
"References not responding for credit information, and larger companies sending their pre-printed credit reference sheet and not filling out the credit application"
- Ed Roth, General Credit Manager, Elkay Plastics Company, Inc.
Time Constraints
"Getting all of the information in a timely manner - we are using electronic communication more and more to gather the required documents from customers and trade references."
- Patricia Magnuson, National Credit Manager, Raleigh America, Inc.
"Getting customers to sign and return timely. We are working with sales and customers on the urgency, accuracy and overall requirements/benefits of information submission."
- Thom Beaupre, CCE, Corporate Credit Manager, Metal One America, Inc.
"Time to receive credit application and complete verses material delivery date."
- Ken Zanolini, Director of Credit, F Rodgers Specialty
"Timely gathering of information - using Sales to help gather the data in a timely manner"
- Anonymous
"Trade and bank reference response time -- we resend the original requests."
- Brenda Oprean, Credit Manager, Newmans
"Timeliness in receiving trade information"
- Joe Shedlock, Director of Credit, Toshiba America Consumer Products
"Delays in securing information from references -- we keep pounding them for the information."
- Randy Clark, CBA/CLP, Assistant Division Manager, Young Electric Sign Company, Las Vegas
"Getting the credit application in advance of the first order - sometimes they arrive at the same time and customer believes they get automatic credit just because they filled out our form. Sales now notifies client that credit department needs 48-72 hours to make credit decision and unless D & B is really good, customer will pay COD for first shipment."
- Paula Thorpe, Credit Manager, Arclin Canada Ltd/Arclin USA Inc.
"Revenue happening even before account is opened -- we are pressured from sales to open account at all cost even with untoward credit checks findings."
- Robert Armenia, National Credit Manager, Border Express
"Time - generally get application with first order, and checking trades takes too long by mail. We ask for bank information, but requests must be in writing and the information provides is very limited if at all. We maintain a trade reference file and collect email addresses. While we belong to two credit groups, we don't always have others that are selling to the account or information is out of date. We are urrently looking into another credit reporting service for smaller accounts."
- C. Haynes, Services Manager, Credit/AR, Impo International Inc
"Finding the time to gather credit references and have people actually provide reference information."
- Eddie Keough, Credit Administrator, Hoover & Strong, Inc.
"Getting requested information in timely manner from those who are listed on credit application and contacted regarding customer credit. Contacting sources and references not listed on credit application that we think might also being doing business with customer."
- Annette Morris, Credit Manager, Pioneer Equipment
Automating the Application
"Trying to get the credit application on-line; it is hard to convince our company it needs done but I continue to lobby and push for it."
- Anonymous
"Addressing the issue of handwritten applications -- we are reviewing website data entry and signature options."
- Anthony Garside, Corporate Credit Manager, Otis Spunkmeyer, Inc.
"Keeping the applications current with up to date information...i.e. implementing a review system whereby all active customers are reviewed no less than every three years"
- Susan Nash, CBF, Credit Manager, TIW Corporation
"Further automation including online processing of commercial applications"
- Tracey Richardson Newton, Director, Credit Risk Management, BlueTarp Financial, Inc
Data Verification
"Verification of information as accurate as stated. Sometimes the contact information on references and banks is not correct."
- Jim Rogers, A/R Manager, WD-40 Company
"Credibility of trade references - we seek additional references from the trade groups we belong to."
- Harris Semegram, Director of Credit, Prestige Brands Holdings, Inc.
Finding Useful Credit Bureau Data
"Our credit application has become nearly irrelevant, as we have found third party credit reports to be much faster and usually sufficient to make a credit decision."
- Gregg Rader, Credit Supervisor, Follett Corporation
"Commercial credit reports that are worth the cost, especially for international customers -- we are trying new sources and tweaking current sources."
- Warren Holland, Treasury and Risk Manager, Kao Brands Company
"Getting customers to supply 5 references - we call and ask them for more if we don't have 5. Good customers understand and will give you what you need. Some banks are now charging for a business reference, as of yet, we have not changed our policy of not paying for the reference (yet?) so we have to rely more heavily on credit reporting services. We are looking at which ones will give us more bang for our buck for the type of business we are reviewing. Thanks to ListServe Members who've given me their wealth of knowledge! Great people, good advise!"
- Carol Jackson (company name withheld)
"My biggest challenge is concerning small accounts that are outside of the sporting goods industry. We have problems getting references to complete credit checks. We have been looking for additional credit agency services but have found it difficult since we have such a tight industry and we get great information, so the others just don't measure up."
- Cindy Boily, Credit Manager, Chariot Carriers, Inc.
Corporate Compliance
"We are SOX regulated and the challenge we face is maintaining a Policy related to Credit Applications that is in compliance but reflects the general business practice involving credit applications and their relevance."
- Jerry Bradford, (no further info)
"This is a new procedure for one of our brands and getting the sales team on board has been our biggest challenge. We get support from upper management and try to explain our reasoning to them as best we can. Customers seem to be ok with the process. We also sent out a mass request to all our customers."
- Melinda Stewart, Credit Manager, Summit Golf Brands
"Maintaining a Credit policy that is SOX compliant and reflects the relevant general business practice around credit applications"
- Jerry Bradford, Corporate Credit Manager, Georgia Gulf Corporation
Obtaining Financials
"Reluctance to provide financials -- we require them for lines over 30K. Handling large volumes of applications with a staff of 1 or 2 is another challenge. We are answering that with increased automation and decisioning."
- Tony Warfield, Director of Credit, D&H Distributing
"Incomplete information and the refusal to provide financials restrict terms and limits. We use customer visits, and at times, sales to get information."
- Jay Woulfe, Corporate Credit and Finance Manager, Trelleborg Automotive
"Limited bureau information on small business coupled with companies refusing to give full financial disclosure on application -- we have talked with sales to let them know applications are sometimes turned down because the company or owner did not disclose this full financial strength."
- Jim Myers, Credit Services Manager, Excel Industries, Inc / Hustler Turf Equipment Inc
Miscellaneous "Job information for Pre-Lien completion before the deadline"
- Alvin J. Valle, Regional Credit Manager, Neff Rentals, Inc
"Knowing what our retailers current banking information/relationships are"
- Cindy LaHaye, Corporate Credit Manager, Tecnica USA
"Applicants viewing credit as a right instead of a privilege."
- Bob Akin, Credit Manager, EDI
"Customer acceptance rate at a good level by using behavior scoring -- with a fast connect sim card we immediately increase revenue and deliver on time customer service."
- Elida Osmani, Credit Supervisor, Vodaphone Albania
"Time, correct signatures, credit line reviews, automated scores"
- Steve Renschen, Credit Manager, Olympus
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