The Importance of Processing Orders Quickly
By Michael C. Dennis, MBA, CBF

Orders should be processed as quickly as possible. For the credit department, I cannot think of a single process that consistently is more important and more deserving of the credit department's attention than processing orders pending as quickly [and as carefully] as possible. Many credit managers take a conservative approach to this process, unless the customer has a solid credit rating and an outstanding payment history. Every company should establish written procedures for prompt handling of orders. Issues to consider in the decision making process include:

• The terms of sale requested

• How much credit is required?

• The profit margin on the sale

• An analysis of the customer's ability to pay

• An evaluation of the customer's willingness to pay

• An estimate of when the customer is likely to pay

• How much credit other suppliers offer to this customer, and the manner in which these vendors are being paid

• The size of the order... [For example, small dollar orders simply require less credit analysis and credit investigation]

• Bank and trade reference, and credit reports

One Final Thought: Some companies have developed an initial credit limit based on reports from Dun & Bradstreet or other agencies. The ratings may be adapted to simplify the credit granting process. This works especially well in companies with a high volume of new accounts and limited time and resources to review each applicant individually and in depth.