This document provides guidance on effective credit management strategies for businesses. It outlines key steps like establishing clear credit policies, thoroughly checking customer references when extending credit, monitoring accounts receivable regularly, and using professional debt collection agencies when needed to recover past due amounts. The goal is to maximize collections while minimizing bad debt by taking a proactive approach to credit risk assessment and payment follow-up.

1. Maximize Your Collections Crucial Steps for Proactive Credit Management Presented by Michelle Dunn

2. What is Credit Management? Management of business credit, A/P & A/R Policies & procedures regarding payments A plan for revolving credit customers Guidelines for collecting money A Streamlined system for contacting customers Avoiding bad debt

3. Objectives Payment options Setting credit limits To eliminate bad debt Collecting money Dealing with past due customers

4. A Credit Policy Must: Be tough & flexible Offer specific guidelines for action Be enforced!

5. Credit & your Customers Be fair, reasonable and follow the law Protect yourself & your business Always check all references

6. Extending Credit Credit applications Fill out & sign Keep original & give customer a copy Check all references Determine & set a credit limit Send customer deny or accept letter New Customer Packets 1. Credit application 2. Credit policy

7. Extending Credit Make it Easy Make it Quick Make it Painless

8. Credit Risk To Minimize your Credit Risk: Get a personal guarantee Offer month-to-month credit Offer ship-to-ship credit Get a security deposit Get a 50% deposit on every order

9. When checking references ask: How long have you known the customer? How long have they done business w/ you? What payment method do they use? Do they pay within terms, late or use discounts? What is their average monthly orders? How often do they order from you? What is their balance due now? Is any of that past due? How much past due? What are your terms with them? Do they make any returns?

10. When checking a bank reference ask: Is this a business, personal, savings or checking account? When was the account opened? What is their average daily balance? Have they had any NSF or other returned checks? Do they have any outstanding loans? What types of loans? Are the loans unsecured or secured? Are they current on loan payments?

11. Credit Management Skills Understanding of credit applications Understanding of state laws, FCRA & the FDCPA Communication skills Negotiation skills Skip tracing/location skills Mediation skills Organization skills Patience

12. What’s in a Credit Policy? How to apply for credit Late fees, interest fees, collection, court or bad check fees Repayment terms & conditions Credit limits Buyer responsibilities Seller liability

13. Correcting debt collection mistakes Enforce your credit policy Research the debtor or past due customer Ask for payment immediately Research & retain a debt collection agency so when the time comes you are ready

14. How much credit is enough? Do they pay their other bills on time or late? Are they always past due? Is there a seasonal pattern? Is the poor payment because of marital issues, the economy or employment issues? What are their anticipated monthly purchases? Will they pay COD while you make a decision?

15. Quick Fix! 1. Print out Credit Applications Give one to every customer Have it filled out and signed Check ALL references Decide if you want to extend them credit

16. When a customer is past due Refer to your credit policy Make a collection call Send a friendly reminder Send a not-so friendly reminder Revoke their credit Follow up!

17. Change bad habits Review your A/R Weekly Collect as much money as possible Stay focused, deal with excuses firmly

18. Resources Free Credit Applications www.MichelleDunn.com/free.html FDCPA – www.ftc.gov FDCPA e-course – MichelleDunn.com FDCPA e-book – MichelleDunn.com