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TOPIC: Unsigned Credit Limit Extensions = Risky Business!

Unsigned Credit Limit Extensions = Risky Business! 8 years 2 months ago #452

  • steph
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Having a good credit procedure extends well beyond receiving a customers' credit application, assessing the information and granting credit.

You should be continually reviewing your customers' performance and credit worthiness.

One area of concern that we often come across, is businesses that allow their customers to exceed their credit limit without any formal documentation.

Your customers' signed credit application will specify a credit limit. You also may have directors' guarantees up to that limit. However, if you then allow them to spend over that limit, you must understand that the amount over their limit is unauthorised by your client, and outside the terms of your credit agreement with them.

So why risk it? Get your customer to sign a new credit agreement with a revised limit or apply for a temporary credit limit increase.
Stephanie Lee
Imprest Business Services
www.imprest.net.au
Facebook: www.facebook.com/Imprest.Bookkeep
"Professional bookkeeping and administration Services"
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