Customer Accounts

When a new credit account is opened, or further credit is provided to an existing customer, Credit Control must play an integral role in the authorization and recording of the transaction.

You could further explain the word 'authorize' as "to confirm the sale is within the company's credit management standard and within the customers credit facility."

For a new customer, credit control should set up a new account, ensuring that the information provided is sufficient to enable credit control to correctly identify, invoice, and control the debtor account.

Identification of Customer Accounts

The major cause of queries (queries cause late payment) in credit control is the lack of the required standard of information to identify debtors easily. Be it, incoming, or outgoing correspondence or in-house communication.

A clear alphanumeric system is a favoured option. For example, ACME Limited could be identified as ACM01. The ACM being the first three numbers of the company's name: with the 01 representing the first customer on your books with the letters ACM. If a new company wanted an account with you who were called ACME Glass. Limited you would give them an account number of ACM02. You could add on a couple of letters or numbers on the end to signify the type of industry in which the customer trades, or to identify any in-house reference.

You may wish to add letters such as 'N' (ACM02N) which indicates that the customer is 'N' for 'New': Or 'C' for 'Caution: 'H' for on 'Hold', etc. These letters are called *'flags'. They indicate special circumstances: no flag means all is in order.