Credit decisions depend only on the owner
Set simple rules for limits, exceptions and escalation.
01 · What is usually happening?
A customer asks for more time or a larger order on credit. Sales cannot say yes, so the owner is called, who decides from memory of how that customer has paid.
It works while the owner is reachable, and not otherwise. It also means the same customer gets different answers on different days.
The question people usually ask“Can we give this customer credit?”
The more useful question“What limit and terms does each customer deserve, and who may decide within them?”
02 · Common causes
- 01No credit limit is set per customer
- 02Payment history is not visible to sales
- 03The owner's judgement is not written down
- 04New customers start with the same terms as old ones
- 05Overdue amounts are not checked when an order is taken
- 06Nobody reviews limits
03 · What to check now0 of 6 checked
04 · What good looks like
- 01Each customer has a limit and terms.
- 02Sales sees the balance before taking an order.
- 03A rule for new customers is written.
- 04Orders over the limit go to one named person.
- 05Limits are reviewed every quarter.
05 · Where this connects
This rarely stays in one department
What it can lead to: Credit is given on a hunch, and the bad debts come from the unwatched cases.
Start from a problem
Work flows left to right, top to bottomKEYMost important for manufacturing
These support every part of the business
Problem
Credit decisions depend only on the owner
Usually connected to
How it spreads
- Finance
What it can lead to: Credit is given on a hunch, and the bad debts come from the unwatched cases.
lamplamp could show a customer's balance, age and payment habits when an order comes in.
08 · lamp
lamp could keep this moving
lamp is not available yet. These are things it is being built to do.
- lamp could show a customer's balance, age and payment habits when an order comes in.
- lamp could hold or release an order against the credit limit.
- lamp could ask the owner only when a case is outside the rule.
- lamp could suggest limits from each customer's payment history.
Does your business handle this differently?Tell us what we have missed: a cause, a check, or a better way of handling it.
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