21 St. Clair Avenue East | Suite 601 | Toronto, ON | M4T 1L8 | t. 416 979 3600 | f. 416 979 8337 |
CREDIT PROCEDURES QUESTIONNAIRE
Pursuant to the warranties of the credit insurance policy, the Insured warrants that it will adhere to its standard credit procedures, as on file with the Company, and consistently follow these procedures to determine each Buyer’s creditworthiness. The following questionnaire shall serve as the Insured’s standard credit procedures once completed and signed by the Insured and accepted by the Company and shall be attached to and will form a part of the policy. If there is a conflict between this questionnaire and other credit procedure documents, this questionnaire shall prevail for the purposes of the policy.
Note: Please attach additional pages if necessary to explain specific aspects of your company’s credit control and collection procedures.
I. COMPANY INFORMATION
1. Name of Applicant: _____________________________________________________________________
2. Address of Applicant: _____________________________________________________________________ City: ____________ Province: ______________ Postal Code: _____________________________
3. Website: __________________________________
4. Contact Name and Title: ________________________ Telephone: ______________________________
Fax: _____________ Email: ___________________
5. Is there any part of your Credit function that you outsource to a factor? Yes No
If yes, with whom? ________________________________________
6. A copy of the Applicant’s credit procedures manual is attached. Yes No
If no, please explain: __________________________________________________________________________ How often is it updated: ____________________________ Who signs-off on any revisions to the credit procedures manual/procedures: Title: _________________________
II. STRUCTURE OF THE CREDIT DEPARTMENT
1. Is your credit management centralized: Yes No
If no, please explain structure: __________________________________________________________________
2. Do all named applicants and divisions follow the credit procedures as outlined in this questionnaire? Yes No
If no, please explain: __________________________________________________________________________
3. Who are the persons responsible for the running of your credit management? Years of Experience in: Name Title $ Authority Reports to Credit in International Level General Credit
4. Total Number of professional employees in the Credit Department? ____________
1 5. Is your accounting system computerized? Yes No If Yes, is the credit control system fully integrated with the general accounting system? Yes No
6. Does your accounting system monitor which accounts are approaching due date for payment? Yes No
7. When are invoices raised and issued? ________________________________________________________________
8. How often are statements produced and sent? Weekly Monthly Other – Please explain. _____________ _______________________________________________________________________________________________
9. Do statements show an aged debtor analysis? Yes No If yes, please provide a copy of one page How often is an analysis produced? Weekly Monthly Other – Please explain. ______________________
10. Do you have a standard condition of sale agreed with all customers? Yes No If yes, please attach copy.
III. AUTHORITY LEVELS
1. Who within the credit department can: Title:
a. Approve a credit limit for a Buyer ________________________________
b. Approve an increase in an existing credit limit? ________________________________
c. Approve a change in payment terms? ________________________________
d. Decide on the course of action to take in an overdue ________________________________
situation?
2. Does the credit department have authority to hold shipments? Yes No
If no, who has authority? _____________________________________________________________________
3. Does anyone outside the credit department have the authority to override a Yes No decision of the credit department? If yes, please advise who and explain.
Has this actually happened? Yes No Describe situation: ___________________________________
____________________________________________________________________ IV. CREDIT MANAGEMENT PROCEDURES
1. Information sources for assessing buyer creditworthiness. Minimum requirements for:
Information Source New Accounts Reviewing Existing Accounts
A. Company Identity Verified
B. Trade References C. Bank Reports D. Audited Financial Statements E. Additional Sources Details: ______________________ F. Credit Agency Reports (List top 3 reports) 1. _________________________ 2. _________________________ 3. _________________________
2. Are credit limits established and maintained for each buyer? Yes No
3. When and how often are customers credit limits evaluated?
Monthly Quarterly Annually Other (Please explain) _______________________________________ 2 4. How often are buyers files updated? Monthly Quarterly Annually Prior to each shipment Other (Please explain) __________________________________________________
5. What general guidelines do you use in evaluating a Buyer’s financial information to determine creditworthiness? _____________________________________________________________________________________________ _____________________________________________________________________________________________
6. Are credit limits recorded in writing in the Buyer file? Yes No
7. Please explain any differences in requirements for a small, medium and large customer: _______________________ _____________________________________________________________________________________________
8. Do you refer to your customer’s account prior to the acceptance of every order? Yes No
Are customers orders obtained in writing? Yes No
If no, what is used to evidence the order? ___________________________________________________________
9. What written credit approval documentation must appear in each Buyer file: ________________________________ _____________________________________________________________________________________________
10. Are regular personal visits made to the Buyer? Yes No
If yes, who makes the visits _________________________ Are visit reports produced? Yes No
11. What information must be received before granting/extending credit in the following circumstances:
If no Financial Statements are To Increase a Credit Line to an Existing If there is a change in Payment available: Buyer: Terms in favour of a Buyer:
12. How are high risk Buyers identified, and how often are they reviewed? _____________________________________ ______________________________________________________________________________________________
V. CREDIT MONITORING
1. How are credit limits recorded? Computerized Credit System Manual System Other – Please explain. ______________________________________________________________________________________________
2. Before each shipment is released, how does the credit department make sure the Buyer still meets the minimum of credit approval criteria? _______________________________________________________________________________________________
3. Account Receivables are checked against Credit Limits:
a. When orders are received: Yes No b. When orders are ready for shipments: Yes No
4. An aging analysis: a. Is produced at least once a week Yes No b. If not, how often ________________________ c. Is shown on the statements of accounts Yes No
5. How often are reports of accounts receivable generated and reviewed and who reviews these reports?
4 6. Does anyone outside the credit department have the authority to release orders/shipments to an account that has been put on stop shipment? Yes No If yes, please explain.
VIII. EXPORT (Please answer this section only if your company trades with companies oversees). 1. Do you have separate Credit Management procedures for exports? Yes No 2. Who is responsible for the processing and administration of the export documentation and collection?
Name Title Reports to Years of experience in
International Credit
3. Do invoices accompany export documents? Yes No
4. Are exchange rates recorded for each transaction? Yes No Please provide details of your source of exchange rates: _______________________________________________
5. Would you pass the account to a third party for collection? Yes No If yes, to whom and at what stage: Arbitrator Collection Agent Legal Adviser ____________________________________________________________________________________________
6. Who has the authority to put an account on stop? Name: _______________________ Position: ______________ Who has the authority to extend a due date and/or reschedule an outstanding account? Name: _______________________ Position: ______________ Under what circumstances would a due date be extended? _____________________________________________ ____________________________________________________________________________________________
XI. OTHER COMMENTS ON CREDIT OR COLLECTION PROCEDURES:
(Please attach a separate sheet if necessary and check here ) ____________________________________________________________________________________________
XII. ATTACHMENTS: (Please check if provided)
1. Credit Control Manual or Policy 2. Aged Debtor Analysis 3. Sample Invoice 4. Sample Contract of Sale
False Information: Any person who knowingly and with intent to defraud any insurance company or other person, files an Application for insurance containing false information, or conceals for the purpose of misleading, information concerning any fact material thereto, commits a fraudulent insurance act which is a crime. Signature and Declaration The undersigned officer of the Applicant declares that he/she has read and understood the notifications above and that the information given on this form (including any additional attachments) is to the best of his/her knowledge and belief correct and represents an accurate representation of the applicant’s credit and collection procedures. It is agreed that this form will be attached to and becomes part of the Application Form.
_______________________________________ _______________________________________ Authorized Signature Title
_______________________________________ _______________________________________ Printed name Corporation
_______________________________________ ________________________________________ Date Contact: Email and Telephone 5 NOTE: THIS QUESTIONNAIRE and all exhibits shall be treated in strictest confidence.
For the purposes of the Insurance Companies Act (Canada), this document was issued in the course of Lloyd’s Underwriters’ insurance business in Canada.
