Credit reports are an extremely useful way to obtain information about customer locations, business names, and general credit condition. However, they do not yield the most up-to-date information about a customer’s immediate financial condition. It is entirely possible that a customer will enter a serious financial decline a number of months before any hint of its condition appears on a credit report. In the meantime, the company may have issued a substantial amount of credit to the customer, leaving the credit manager in a tenuous position.
An excellent solution is to join an industry credit group. These groups exchange information about specific customers, such as recent problems with notsufficient-funds (NSF) checks, bankruptcies, accounts being sent to collections, and other financial difficulties, so the credit department can take quick action to tighten credit where necessary. This is also an excellent opportunity for networking, so credit personnel across the industry can more easily exchange information.
The National Association of Credit Management (NACM), which can be reached at www.nacm.org, maintains a listing of national credit management groups, including those in Exhibit 7.2. The NACM lists meeting intervals and contact information for each group’s administrator.
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