Other sources of credit information

Last Saturday, September 22, 2007 I was in Regency Inn Hotel in Davao City for a whole day training orientation with our institutional partner, Norkis Group of Companies (Mindanao Area). It was attended by over 50 participants mostly Credit Officers (CO) and Managers. There I met Mr. Romeo “Romy” Marañon their Managing Head for RFO Mindanao. Our discussions were mostly focused on credit evaluation and checking using CIBI InfoNet On-line. To further reinforce our training orientation, I promised that I would provide them with more articles pertaining to other sources of credit information.  So here it is.

The Sales Group. I always believe that through the frequent calls of the salesman on customers, the salesman may receive early news of changes in sales trends, collection, movements of inventory and other matters. Since the salesman knows his account personally, his information can be of great value to the Credit Officer and/or Manager. Due to the regularity of his visits, the salesman can be trained to develop facts and impressions on a continuing basis to make a report on this.

Customer-Supplied Information. In the final analysis, the principals of the company being credit evaluated have many answers not obtainable in any other sources. Indeed, there is no better source of information about the operation and financial condition of a business than the business owners themselves. Therefore, it is reasonable to expect that direct contact with a customer can provide the credit man with the available financial details, bank and trade references, and other information of importance. How this information is requested and obtained will depend upon the time available, the location of the customer, the relative importance of the credit exposure, and the degree of cooperation, which can be obtained from the customer. Direct contact between the credit department and the customer offers many advantages. Regardless of the method used, such contacts can be invaluable in establishing a close and friendly working relationship and inspiring mutual respect and confidence. They can be used to clarify terms of sale, thereby obviating possible dissatisfaction on the part of the buyer. Particularly, at the early stage of the relationship, direct contact can assist in the developing a sound basis for continued credit granting. The Credit Officer/ Manager should remember that he is the representative of his company and that sound credit administration is undoubtedly one of its finest tools. A Credit Department which builds goodwill with its company’s customers will also gain the fullest cooperation and respect from the sales department. Contact with the customer may take the form of a personal visit, a phone call, or by direct correspondence.

Bank Information. Banks are usually quite knowledgeable about marginal companies. The larger banks in the metropolis area have files, which contain a wealth of information.