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Credit Granting Procedure

The following credit granting procedure sets up a regimented process for using the same method, every time, to evaluate customer requests for credit and formulate the correct amount of credit to grant. This approach reduces the risk that a few customers will receive inordinately high or low credit amounts.

Obtain Credit References (Credit clerk)

1. Pull the customer credit application form from the the forms cabinet.
2. E-mail or fax the form to the customer who is requesting credit.

Contact Credit References (Credit clerk)

1. Verify with each customer reference listed on the form the maximum and average amounts of credit granted and used, as well as any issues with slow payment.
2. Obtain the names of other credit references from these references, if possible, and record the answers to the same questions from them.
3. Contact the bank reference listed on the form and verify the existence and duration of the applicant's activity with the bank.
4. Document all information obtained and attach it to the completed customer credit application form.

Obtain Credit Information from Other Sources (Credit clerk)

1. Contact Dun & Bradstreet's automated online credit reporting system, enter the customer's address, and specify that you want to receive the Business Information Report.
2. Print the Business Information Report and attach it to the completed customer credit application form.

Assign Credit Limit to Customer (Credit clerk)

1. Assign the standard initial company credit limit of $_____ to the customer.  If the initial customer order size is larger than the standard initial credit limit or if the application or credit report indicate some danger of not being paid, review the credit limit with the Controller.
2. Enter the credit limit in the "For Company Use" part of the customer credit application, as well as the customer number as assigned by the computer system, and sign and date this entry.
3. Enter the approved initial credit limit in the computer system.
4. File the completed customer credit application in alphabetical order by customer name.

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Collections procedure