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Creating a well-crafted credit app

Hi Thea,

Do most companies have different versions of their credit application with different information on them for different types of businesses? For instance, should we have a credit application for a large, publicly traded company and another for a smaller company? What about government, education, and non-profits? I am not sure if we should be changing up our app for different types of businesses or I should change my process or what I look at.

— Experiencing Double Vision

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Dear Double Vision,

How complicated do you want your business to be? Stop worrying about what most companies do and ask what best serves your company. What is driving you to question the need for multiple versions of your credit application? The K.I.S.S. (Keep it simple silly) method has long been around for a reason. The more complicated you make any process, the less likely it is that people will follow it and the less successful you will be at implementing it.

Let’s address the elephant in the room: Don’t extend credit to consumers. That opens up an entirely different and complicated credit extension and collection landscape that most in our industry are not prepared to sculpt.

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After that, it is simple and straightforward: Regardless of who you sell to—Chuck in a truck, farms, ranches, commercial, tract and residential contractors, property management, military, schools, non-profits, utility companies, distributors, big box, dealers, Fortune 500, or any government entity—no matter what type of organization they are, you only need one credit application.

They are applying for a credit account with your company. A well-crafted credit application that asks for all the required data—the who, what, where, and how—along with terms and conditions, is designed to put the “rules of engagement” for both sides out in the open. If you think of business as a game, consider your T&Cs the rules. Everyone knows how we are playing.

You will get exceptions. Large public corporations usually will not fill out an application and have a “pre-done credit information form” that they submit, usually with a purchase order (watch for T&Cs on those and make sure they do not conflict with how you roll). Government entities normally offer a contract or purchase order in lieu of that credit application. Make sure you read the contract, understand it, and question what you don’t. Anything you don’t understand, ask the company submitting and have a quick chat with your attorney to double check.

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Big box stores and tract builders customarily use a master contract. If you are not familiar with reading these, and they are usually voluminous, don’t be proud. Just like with government contracts, spend a few bucks with your friendly company attorney and make sure you are not creating a cashflow nightmare for yourself.

It is normally tough enough for a sales rep to get that credit app in front of the customer. Getting it completed and sent to you is another step. Do you really want to see that sales rep’s face drop to the floor when you casually mention that you appreciate the effort but the customer filled out the incorrect credit app and can you ask them to fill out the correct one?

Have you ever watched a cartoon where the head explodes and glitter comes flying out? That will be your office.

Covered in glitter, tears, and possible thoughts about your early demise as your sales person tries to form a socially acceptable response to what will be considered the cruelest question ever uttered. Show that rep a little credit love. Have one well-crafted credit application. Glitter is optional.

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