How to build a credit process to boost sales

30 November 2021

Imagine you’re thousands of feet in the air, piloting your own plane and taking in the sky’s different hues of blue as they fade into the navy-coloured sea on the horizon. Enjoy the moment. You’re on your way… but how did you get here? 

Apart from years of study, it was probably thanks to careful preparation. 

Any pilot worth their stripes knows that preparing for a flight involves several safety checks, starting with a cabin inspection. Then, you ensure that all your paperwork is in order, and all the switches are in position. Next, you inspect the exterior of the plane. After another 30 steps or so, it’s time to fly.

I’m an avid flyer who loves trying to understand aeronautics, but I’m also a receivables and credit consultant. And by straddling these two worlds, I can tell you that there are a lot of similarities between preparing for a flight and  credit management. Plane safety can mean the difference between life and death. For your company, the sales and revenue are its lifeline. And you should protect this lifeline with a well-defined credit process.  

In my last article, I covered  how to align your credit process with your people and the company’s purpose. Now, we’ll deep-dive into how to build these all-important guidelines.

In a business, you want to have an air-tight credit process that enables your sales team to simply jump into their planes and take off (read: make the sale). A solid credit process outlines all the initial information your sales team needs to gather from clients in order for your credit managers to approve the required credit once the sale is made. 

Empower your sales teams to soar with a process that covers these four steps:

• You know your company best. Create definitions that specify what a small, medium and large client mean for your business (for example, according to headcount or turnover).

• Identify the standard and maximum  credit terms you can extend, according to the defined size of each client.

• Outline a set of criteria that need to be fulfilled by each client group in order for your company to extend trade credit (for example, any financial documentation that needs to be provided).

Ask your sales team to  perform background credit checks on their top 10 prospects. If they can verify these companies’ creditworthiness in advance, then they can pursue them aggressively by offering more flexible terms.

  • After completing steps 1 and 2, you’ll be able to define a set of rules that enable your sales team to instantly extend terms to a client.
  • • For a small client, the rules can be as simple as obtaining a credit report or a verified  trade credit application.

  • • For a medium-sized client, it may be specific things to look for in a pre-screening phase.

  • • If the client is very large, they are likely asking for a lot of credit. You may want to ask them for financial statements in exchange for truly open terms.

Every industry has follow-up steps and rules to follow. Clearly defining these—and ensuring that everyone involved in the sales and credit process knows them—is essential for instant and secure growth. 

Once you’ve given terms efficiently and securely, you’ll need to support your sale though clearly agreed-upon next steps. Your sales team should be able to confirm that the client has agreed to costs such as your shipping fee and hourly rate, and that they’re aware of what’s included in your after-sales service. 

Once these steps are completed, your sales teams can enjoy the freedom to fly. Freedom comes from preparation, and ensuring that no turbulence will affect you along the way. At Euler Hermes, we help clients define what tools are needed to enable your teams to sell freely and safely. 

In my next article, we will look at how to manage your process once you have extended credit to multiple clients, or when certain clients dictate your success. Stay tuned and happy selling!

Ryan Hurtado

Senior Credit and Receivables Consultant,
 Euler Hermes USA