ExtraCredit
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The
following newsletter contains information to benefit credit and
risk management professionals, and is being sent to you as a client
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Six tips to getting financial statements
One
of the biggest problems that most companies face is getting financial
statements from customers. It seems that only the very few companies
that possess some kind of tremendous leverage can get financial
statements all the time. Most have to accept much less than their
ideal. However, according to credit manager-turned CPA Cindy Moorhead,
a systematic approach using the following six tips can help you
to have better success in dealing with this problem:
DON'T
BE AFRAID TO ASK
Look at it in this light. Would a banker ask for financial information
if he were extending a loan for this amount to your customer? If
yes, you have the right to at least ask for financial statements.
They also have a right to tell you they will not provide them. Just
don't be afraid to ask the question.
SEND
STANDARD LETTERS AS A MATTER OF CREDIT DEPARTMENT POLICY
Moorhead recommends sending a letter annually to each customer for
whom you don't have financials. The letter should say something
like "we are in the process of updating our credit files and
find we do not have current financial statements on your company.
Please send us your most current annual report so that we may update
our records." This is a very non-threatening request for updated
financials. Don't wait until your customer has payment problems
to ask for financials.
PERSISTENCE
PAYS: DEVELOP A FOLLOW-UP SYSTEM
Follow up on the above letter in 30 days if you haven't received
a response. Make a copy of the letter and write the current date
and "SECOND REQUEST" at the top of the copy, and then
flag it again for follow-up. Many customers will ignore the first
request, and maybe the second, but by the third request, they may
get tired of hearing from you and send the statement. Don't drop
the follow-up ball.
CALL
THE CUSTOMER
If your requests go unheeded, simply give them a friendly call.
They may tell you their new annual report is due out in another
month. If so, tell them you will follow-up in a month and a half
and flag it again. If you don't, they probably won't remember to
send you the new report when issued.
USE
THEIR CREDIT LINES AS LEVERAGE
If your company adheres to credit lines and your customer needs
orders which will put them over their credit line, tell them you
would love to be able to increase their line. But, because of your
department's credit policy, you need to have justification from
the financial statements before doing so. Or, better yet, if you
feel comfortable doing so, tell them you'll release their order
this time, but will need financial statements before increasing
their line on a permanent basis, so you won't need to be calling
them before each order is released. Moorhead says that she has received
many statements because the customer didn't want to hear from her
prior to releasing each order.
USE
SPECIAL REQUESTS FOR LEVERAGE
If your customer is asking for some special allowances, tell them
you would love to grant their request, but you'll need a financial
statement to justify the special allowance. - "Credit Today"
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