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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"
