Using Trade Reference As Part Of Credit Vetting Procedures

In the credit application form we can put a request to the customer for the names of his trade references.

Why is this so? The taking of references has becomingly more common. Seeking trade references can greatly help the credit manager/controller in the credit vetting  of his customer. So we should make it as easy or convenient as possible for the referee(s) to reply. One way is the use of pre-printed form and stamped addressed envelope. Once a trade reference is sought,the credit controller should follow up with a telephone call if he has still not received any reply.

Below is a sample of A REQUEST FOR A TRADE REFERENCE

PRIVATE AND CONFIDENTIAL

Dear Sir,

ABC Ltd of 90,James Street,45000,Birmingham

The above has given your name as a trade reference. We would be grateful if you would answer the questions at the foot of this letter and return it in the enclosed prepaid envelope.

Your reply will be treated in strict confidence,and at any time we will be pleased to respond to a similar request from yourselves.

Yours faithfully

———————–

Johnny Smith

Credit Controller

How long has the above-named traded with you _______________

What is the highest credit allowed? $________________________

What are your payment terms?____________________________

Is payment normally Prompt/Slow/Very Slow

Do you recommend them for a total credit of $_______ Yes/No

Any other information that you think might be helpful

____________________________________________________

____________________________________________________

• A Simple Credit Vetting Or Evaluation Checklist
• Salient Features of a Good Credit Policy and Procedures Manual
• Why Should Credit Limit Be Imposed.Is it necessary for the company to inform the customer about its credit limit and credit terms?
• Use The Corporate Guarantee Form When Granting Credit Facility To Your Customer Who Belongs To A Group of Companies
• Non-Financial and Qualitative Factors in Credit Decision
• ALL TOPICS COVERED UNDER THE HEADING-CREDIT MANAGEMENT/CREDIT CONTROL
• What Factors To Consider When You Increase The Credit Limit Of A Customer