Underwriting Credit Authorities

Introduction

The following table is based on the ‘minimum’ level of authority required for underwriting credit sales. If any of the four criteria are not met as a minimum, the next level up must authorize the credit sale.

‘Credit Reporting Structure‘ can be any authority level that fits your business, i.e.

• Level 1 = Managing Director
• Level 2 = Finance Director
• Level 3 = Credit Manager
• Level 4 = Administration Staff

Credit Policy Standards & Assessment can be read as follows:

* SPT = ‘should prove trustworthy’ * SPG = ‘should prove good’

SPG is a better reply to a bank reference than SPT. Where as, ‘undoubted’ is the best reply, and ‘cannot speak’ is the worst.

Credit Reports & Analysis The scores can be marked out of a 100: 80/100 would indicate a safe risk: 60/100 is not so safe: 20/100 would probably indicate that the company is unlikely to survive (or the company may be a new business with little capital).

Credit Limits & Risk Category It is usually sufficient to use three categories to rate your client/customer:

* Risk Grade ‘A’ = Low Risk * Risk Grade ‘B’ = Average/Normal Risk * Risk Grade ‘C’ = High/Above Average Risk

Underwriting Credit Table