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Our Subscribers Say...
I think Credit Today is fantastic. You cover many practical topics in the credit field that I use regularly. Just one recent example—a conversation on the ListServ about preferential payments—gave me tips that I used in an actual case. The specific information I picked up from this one discussion saved me $10,000, enough to cover my membership for many years!
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Manager of Credit & Collections, ASSA Abloy Americas Division, New Haven, CT
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Credit Manager, Big Lots Stores, Inc., Wholesale Division
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David Dungan, Director of Credit
Justin Brands, Inc. (A Berkshire Hathaway company)
Fort Worth, Texas
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Ron Woods
Corporate Credit Manager-World Wide
Thales Navigation, Inc.
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D. Mark Constantine
Corporate Credit Mgr
Fulton Paper Company
"I love Credit Today and read every issue cover to cover. For me, the greatest perk of a subscription is ListServ. I believe Credit Today's ListServ members may be the most knowledgeable Credit brain trust in existence today. I have saved and categorized hundreds of contributions on a wide variety of topics which I refer to often. It's an easy and cost effective way to network and learn."
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Average Time to Approve a New Order – By Business Type
According to the recently released Credit Today 2005 Credit, Collection, and A/R Staff Benchmarking Survey, the leaders in processing new orders quickly are those in the service and energy sectors, who process new accounts in .56 and .92 days, respectively. The table below shows the average length of time it takes to process a new account by industry.
| Average Time to Check a New Order (in Days) |
| Business Type |
Avg time to check credit on a new order |
| Mfging - Consumer Products |
1.78 days |
| Mfging - Industrial |
1.44 days |
| Wholesale/Distributor |
1.53 days |
| Construction |
2.31 days |
| Energy |
.92 days |
| Service |
.56 days |
| Media |
3.31 days |
| Financial |
.96 days |
| Other |
1.52 days |
| Total - Overall Average |
1.60 days |
Survey Data Shows a Level Playing Field
We found relatively few variables that correlated with speed in checking credit on new orders. Big firms have no real advantage in this area over smaller firms.
The two things that are associated with slower turnaround are the checking of trade and bank references. Those who report “always” checking trade references take average 2.1 days to check a new account.
Those who report “always” checking bank references take an average of 2.3 days to turn around a new account. The overall average is 1.6 days. Of course, this is not to say that this may not be time well spent. That cost delay in approving new orders) may well be cheap, relative to what information is determined. Only each individual company can know this for sure.
Impact of Outsourcing on New Account Checking Speed
The most statistically significant variable was telling. We found that outsourcing of the credit checking function is associated with slower turnaround on new account approvals.
Out of the 400 plus participants in the survey, there were actually only eleven firms that outsourced this function, ranging from 5 to 100 percent of the function. But those eleven firms averaged nearly a full week (4.86 days) to make a determination on a new account’s credit line, compared to 1.5 days for the rest of the survey universe that are not outsourcing the credit function.
Even removing one “outlier”* from the survey’s data (one firm reported a turnaround time of 23 days), the average turnaround time is still 3.0 days for those outsourcing the function, double the average for those doing it in-house. Something to consider if you are considering this.
* Note: An outlier is statistical term for data that deviates so much from the rest of the numbers in a sample that it can be considered as irreconcilable with the other data.)
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