A Letter Communicating you Cannot Extend Open Terms to a New Customer

This letter can be used when you do not have enough information to extend open terms to a new customer.

Comments

1. From time to time, a creditor has no choice but to reject an applicant for open account terms.
2. This is never a popular decision with the customer or with the sales department.

    

3. The salesperson should be notified before the applicant of the decision not to offer open account terms. As a credit manager, you should take the time to explain the credit decision in detail to the salesperson.

    

4. You should be very careful about what information you share with the salesperson. The salesperson should be reminded not to repeat anything to the customer about the credit department's reasons for the decision not to offer open account terms.

    

5. The letter to the customer should state clearly that you have denied the request for open account terms. If appropriate, you should offer the customer alternatives, which might include sales against a standby letter of credit or CIA terms.

    

6. The letter should indicate that the decision will be reevaluated from time to time as conditions change or as additional information becomes available.

Note: As always, your company's situation (market, management risk appetite, etc.) and style will be unique so this can serve as a template to get started.