Whether you have taken advantage of our free credit applications or not, your business needs to utilize an internal checklist during the investigation process to verify that the information provided is correct. A verification checklist not only keeps your staff honest in verifying the entire application for every client, but ensures that your business is not endangering itself with bad business debt. This is particularly important for clients who you have never worked with.
If you have not used a credit application checklist in the past we suggest making it your year-end goal to review all existing credit applications for credit that is currently extended.
Verify the following business information provided within the credit application and review any discrepancies with your client:
- Legal entity status
- Most states’ Secretary of State Websites will allow you to verify the corporate status. Make sure to keep this on file either digitally or as a hard copy. Included on this site will be the principal office location, the business’s original date of formation and their main point of contact.
- Phone
- Do not just verify that the phone number is listed online. Dial the telephone number and see if they answer with the name given.
- Business Name
- Address
- Contact Name/Title
Verify the following bank information:
- Name of bank
- Address
- Phone
- Contact Name
- Account Number
- Age of Account
As a best practice, always contact the trade references listed on a credit application. Remember, most business owners only provide contact information of companies who they know will give good references. Nevertheless, contacting the references provided will give you a further understanding of a client’s payment history, relationship with other vendors and balance ranges that they have had in the past. If you do have concerns over a client, you can always investigate and see if they include suppliers on their website who you can reach out to. They may provide you a more accurate snapshot of the client’s history.
The credit application and investigation process are valuable tools for your business. Always keep a copy of both the application and your investigation notes for future reference.