Denied!

In addition, Shultz says to consider advance payments or deposits, to gradually build a credit history. Offer to open increasing unsecured credit over time, with good payment experience, personal guarantees, or cross-company guarantees, and to determine if perhaps “Uniform Commercial Code securitization is a practical alternative based on the nature of the products you are selling to the prospect or customer.”

Shultz also emphasizes regular contact with the owner or senior officer to discuss  business conditions and future needs, and to keep sales representatives informed as to what they should be looking for to anticipate creditworthiness issues.

Although both Amendola and Shultz strongly encourage produce marketers to minimize risk and protect themselves legally, they also say to remember that the ultimate goal is to find a way to make credit work for both buyer and seller, and close the sale.

“You should have some alternative means for customers to acquire your products,” Shultz says. “Credit can become the sales-enabling department, which is exactly what they want to do. The objective at the end of the day is to build your company’s revenue, while managing risk. That doesn’t mean preventing all risk; it means managing it to an acceptable level.”

A Gaze at the Crystal Ball

Robert S. Shultz, partner in Quote to Cash Solutions LLC in Simi Valley, CA has spent many years analyzing credit regulation. Here is how he sees things unfolding in coming years:

(1) a reduction in top personnel and overhead devoted to the function

(2) increased use of credit scoring tools to automate credit analysis functions

(3) a vast increase in the information available via the web on industry trends and company status and performance

(4) added consistency and transparency in customer exposure through various automation techniques: billing and collection and dispute-management automation (EDI, customer/vendor portals, etc.); rising use of electronic forms of payment: (electronic checks, remote deposits, debit ACHs); and bank creditor connectivity for monitoring cash receipts and applying payments (electronic lock boxes and the use of Autocash for payment application and settlement).