Sources of Getting Credit Information

 Introduction

The letter that is written with the purpose of collecting some information about a business enterprise can be termed as a business status inquiry letter. Here, One business Enterprise (Lender) requests referees(References provided by customer) to provide necessary information about the prospective customer. The purpose of writing Status Inquiry Letters  is to check…

• Financial capability or creditworthiness
• Goodwill
• Nature of business dealings
• Honesty
• Relationship with other business association etc

When an unknown business firm demands goods on credit, The Opposite party asks for one or more references with whom the seller can ask for some information about the credit seekers. Usually, banks, trade associations or competing business firms are mentioned as references. So, letters written by Sellers to References provided by customers are known as Status Inquiries. Below are some sources through which you can avail information regarding Status InInquiries.

Internal Sources 

Internal investigation is one of the direct and easy sources to assess your customer. You can check the past order history of the customer along with the Size and Value of the Orders placed by the customer. Information regarding Whether he is a Regular Cash Customer or Credit Customer can be obtained from the Salesman's Report.

From the Customer

Conducting a face to face interview with the Customer himself can also provide certain basic information pertaining to his creditworthiness. As a part of Credit Policy a Business Enterprise can also ask for Financial Statement, Banking Statement, Trade References as well as Bank References. 

External Sources

There are different kinds of Debtors like…

• Careless Debtors (Forget to pay)
• Reluctant Payer (Won't pay unless he is forced to pay)
• Instalment Payer (who pays in batches)
• Good-Risk Debtor (who pays before time
• Poor-Risk Debtor (Neither has capacity nor capital to pay back

So, Before granting Credit Policy to new customers, the Credit Department must contact Trade References and Bank References for the detailed information of your customer. You can also contact different Trade Associations, Chamber of Commerce, Enquiry Agencies, General Mercantile Agencies to get the Credit Score of your prospective customer.

Ex: TransUnion CIBIL, Equifax, Experian, CRIF Highmark etc…