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Part 5 of 7 · Credit limit reviewer series ~5 min read

How a credit decision reaches the sales floor

Every part of this system is preparation for one moment: somebody is on the phone, the order is forty-two hundred, and the answer has to be right and immediate.

Key takeaways

  • Headroom belongs in the order screen, not in a report.
  • A refusal must carry the alternative, or it is just a no.
  • Overrides are legitimate. Unrecorded overrides are not.
  • Show the reason and the date, always, on every answer.
  • One monthly view: total exposure, by band, and what changed.

At the point of order

A credit check at the point of order, ending in options rather than a refusalA horizontal row of five boxes. Order keyed, four thousand two hundred pounds. Headroom checked, in under a second. One thousand eight hundred pounds available, not enough. Options offered: part-ship, deposit or card. Sale, on terms that suit both. A note says the third box is where most systems stop and it is the most expensive place to stop.THE THIRTY SECONDS THAT MATTEROrder keyed£4,200Headroom checkedunder a second£1,800 availablenot enoughOptions offeredpart-ship, deposit,cardSale, on termsthat suit bothThe third box is where most systems stop, and it is the most expensive place to stop.
Fig 1. The moment the whole system exists for. Everything upstream is preparation for the fourth box, which is the one that keeps the customer.
  • Machine learning
  • Management
  • Analytics

Under a second, or it will be bypassed

A credit check that takes eight seconds gets worked around within a fortnight. Somebody will start keying orders and checking afterwards, which is the same as not checking, and you will not find out until the quarter it matters.

This is why exposure is a single stored number recomputed on events rather than a query that sums the ledger on demand. The read is one lookup, and the expensive part happened when the order was accepted, not when somebody asked.

What a good refusal contains

Four things, every time

  • The headroom. Not ’declined’ — the actual number, so the person can see whether a part order fits.
  • The reason. At limit, or overdue balance, or under review. These lead to completely different conversations.
  • The alternative. Part-ship to the available value, take a deposit, take a card, or release on approval.
  • Who can approve it. A named person, not ’contact accounts’. The order is waiting and the customer is listening.

The alternative is the part that pays for the system. A customer at their limit still wants the goods, and part-shipping to the available value while taking a card for the rest converts an argument into an order that is smaller but real.

Overrides are supposed to happen

How a credit override is recorded and surfaced laterA vertical chain of four steps entered by a box labelled Order blocked, four thousand two hundred against one thousand eight hundred. Step one, Somebody knows more, quoting that their payment cleared this morning. Step two, Override with a reason from a picklist, with a side box noting And a name, always. Step three, Order proceeds immediately. Step four, It appears in the review next time this account is looked at. A note says an override rate of zero means the limits are too high rather than that the process is working.AWS ACCOUNTOrder blocked£4,200 vs £1,800Somebody knows more'their payment clearedthis morning'Override, with a reasonfrom a picklistAnd a namealwaysOrder proceedsimmediatelyIt appears in the reviewnext time thisaccount is looked atAn override rate of zero means the limits are too high, not that the process is working.
Fig 2. The override path, which exists deliberately. The fourth box is what makes it accountable without making it slow.
  • Machine learning
  • Security & identity
  • Analytics
  • People

Why blocking the override is worse

A system that cannot be overridden gets routed around entirely: orders go on a different account, or as cash sales, or on somebody’s word to the warehouse. That is the same risk with none of the record.

An override that takes four seconds and records who and why is a control. An override that requires a form and a manager’s approval is an obstacle, and obstacles in a sales process lose to the phone call every time.

The monthly view

One page a month, and it is not a list of accounts. Total exposure, split into three bands — comfortably inside limit, close to it, and over — with what moved since last month and why.

That page answers the only question the owner actually has, which is whether the amount of money out on trust is going up or down and which two customers are responsible for the change. A twelve-page aged debtor report answers a different question that nobody asked.

What this system does not replace

It does not replace ringing a customer who has gone quiet, and it does not replace knowing your trade. What it replaces is the situation where the number in front of the person taking the order is wrong, stale, or missing entirely.

Everything else in credit control is judgement. This is just making sure the judgement is exercised against accurate figures at the moment it can still change the outcome.

Next: what all of this costs to run.

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