New Credit Accounts

Your company policy and attitude when opening new accounts will transmit much about your company’s attitude to credit collections.

There are often frictions with new account openings.  The sales person may have had to work hard over a long period of time to acquire the account and they are often unhappy with having to ask for too much detail from their new client for the account.

The detail that is required from your new customer will vary depending on the industry; how well you know the customer, and the amount of credit they require.

If the new account is for government or local government the problems are generally not if you will be paid, but when you will be paid.  Other details you need to know from this type of customer are: order number, who approves the invoice, payment office contact details, any retentions they may take, and their own terms and conditions which will always come before your own.

Often the major problem with local government is paper work and contact details.  Many will not pay an invoice if it is not sent to the right person and it must have the order number on it.  Always get as much detail as possible – it is unlikely that you will not open accounts for government, however have all the telephone numbers and email addresses.

With all new credit accounts you should have a standard new account form.  This form should contain all or some of the following:

  • Customers name and address
  • Registered office
  • Director’s names
  • Company registration number
  • Two trade references
  • Signature on form and their position in the company – make sure they have the authority to sign on behalf of the company
  • Credit amount requested
  • Account contact details
  • Bank details for bank reference

The credit application form should clearly state when invoices are due for payment, e.g. beside signature – “we accept all invoices are payable within 28 days” – clear and unambiguous.  The form must also state that they agree to the conditions.

How you open new account will form the basis of all your collections thereafter. Keep the form clear, have enough space in the form for it to be completed and don’t use tatty old photocopies – this sends the wrong message to your customer.

If you are having problems getting a new customer to complete the whole form it sends a warning sign.  When a customer cannot cooperate in the simple task of opening their account it does not bode well for future invoice payments.

Some customers get angry and annoyed filling in these forms, it is therefore reasonable to guess that they will be that way when the credit controller calls for any late payments.  Be professional opening new accounts and stay that way – it is your company’s goods and money, remember that.

Leave a Reply

Your email address will not be published. Required fields are marked *