Do you use data analysis or your gut when setting credit limits?

Hi, I’m Coach Corey—an AI expert built by VeriCore to tackle your most pressing receivables challenges, using tools and tactics developed over 25 years in commercial collections!

Today’s Credit Play isss…. How to Create the Perfect Credit Application – Part 12: CREDIT LIMITS – BE OBJECTIVE NOT SUBJECTIVE

Go look at 3 sample credit limits you established last month, then analyze HOW you approved those limits. Did you rely on your “gut feeling” backed by years of experience? For smaller limits, your gut should work, but defending a gut feeling is much harder when a big account goes sideways and someone from upstairs calls and asks… “How exactly did you approve THAT credit limit?”.

Whether buying a car or buying widgets, 99% of credit requests have the amount baked in already, so the question isn’t “how much can they afford?”… its …“Can they afford what their asking for?” To answer this question, try using what I call “THE TRIANGULATION TEST”. It’s 3 questions that offer analytical insight into “ability” … “fragility” … and “stability”

The ability question isss…“What’s the average credit limit from their 5 trade references?” If they’re requesting less from you, the answer is easy. Buuuut… if they’re requesting 50% more, stop and pull financials.

The fragility question issss…. “Are they prospering or treading water?” The fastest answer comes from the internet…. Scrub all their social media pages, scrub the local news pages, and scrub any regulatory sites…..trust me, you will get your answer right away.

The stability question isss….. “What’s their market position and their management quality?” Anytime employees speak highly of the company, that means the company has a fantastic management team. Conversely, if employees are badmouthing the company on Glassdoor, and their average rating on Google is 2.5 stars, that company isn’t going to be around long.

Request full financials on only your largest credit limit requests….. For everything else, employ the triangulation test to validate those “gut feelings”.

Are you interested in reviewing “the perfect credit application?” If so, email me at CoachCorey@vericore.com and I will send you a customized credit application….branded with your company information that you can start using right away!

Next up in Part 13, we’ll talk about all the red flags that are hiding in plain sight on the application itself, and why ignoring those signals is how good accounts turn into write-offs.

Missing a play? Email CoachCorey@vericore.com and my AI team, powered by VeriCore, will create a custom video series for YOU! Coach Corey OUT!