A major problem within the credit department can be the time it takes to create a new customer account. A number of activities can delay new account creation, including queue time (the credit staff has other work in front of it), the time needed to issue and obtain a completed credit application, the time needed for issuing and receiving completed reference letters, and then the needed to evaluate this information and conduct the actual setup in the computer system. Clearly, this process can take multiple days – while the potential customer waits and waits for an order to be fulfilled.
If this appears to be a problem, then consider measuring the new account opening cycle time. The measurement is the elapsed time from when the credit department initially receives a credit request to when the account is finally opened in the computer system. Since some credit applications may be refused once the evaluation is completed, they will obviously not be entered as new accounts at all, so a separate method must be created for tracking the process termination date for these applications.
Once measured, summarize the durations for all new accounts created to arrive at an average new account opening cycle time. It may also be useful to use the individual measurements to create a bell curve of the results, in case there is a wide distribution of results.