Who approves the credit line for a huge new order?

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 11: THE APPROVAL MATRIX – WHY YOU NEED A CHAIN OF COMMAND

What’s your protocol if a new client places a gigantic order, AND demands that the order ships in 3 days or less? Emergency room protocols don’t process patients on a first come first serve basis….and neither should your credit department. Special orders like this require a triage approach which means someone needs to take the lead, drive the team, and monitor progress.

Don’t let bad decisions happen just because the pressure gets turned up! Pressure rises when sales managers call hourly for updates…. or customers threaten cancellation if orders ship late…..or even when big bonuses are on the line. This is precisely why you need an approval matrix and precisely why you CAN’T TAKE SHORTCUTS!

Your point person needs the proper experience, the proper level of authority and they must be able to effectively delegate. The credit play here is to have them divvy up the credit application to multiple team members so you can accomplish in 3-4 hours what normally might take 3-4 days.

Who’s best at calling Trade References? …. assign it out!

Who’s best at calling Bank References? …… assign it out!

Who’s best at internet research? ….. assign it out!

Then, after the analysis is complete, the last piece in the approval matrix is to get the right person to sign off on the credit line. The general rule for signing off on big orders is to push the order up the chain of command to the person who would be negatively affected the most if the account goes bad.

Sometimes, that’s the controller…. Sometimes that’s the CFO and other times it goes all the way to the President or Owner as risk should never be compromised by pressure.

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!

In this video we talked about WHO approves special orders but what about setting credit limits for regular new orders? Part 12, I’ll show you how to set credit limits objectively, turning net worth, trade references, and DSO into a defensible number instead of a guess.

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!