What is Credit Management?
Credit management is a term used to identify accounting functions usually conducted under the umbrella of Accounts Receivables. Essentially, this collection of processes involves qualifying the extension of credit to a customer, monitors the reception and logging of payments on outstanding invoices, the initiation of collection procedures, and the resolution of disputes or queries regarding charges on a customer invoice. When functioning efficiently, credit management serves as an excellent way for the business to remain financially stable. The process of credit management begins with accurately assessing the credit-worthiness of the customer base. This is particularly important if the company chooses to extend some type of credit line or revolving credit to certain customers. Proper credit management calls for setting specific criteria that a customer must meet before receiving this type of credit arrangement. As part of the evaluation process, credit management also calls for determi
:WBB5043 CREDIT AND SYNDICATED LOANS MANAGEMENT PROF FAOZIAH IDRIS AMINA OMAR MOHAMUD 88024 6 What is credit management? Credit is defined as confidence in a borrower’s ability and intention to repay. Credit management usually deal with the credit vetting of customers, the resolution of any invoice queries, allocations of payments, internal fund movements, and reconciliations and also maintaining relationships with customers. Cont… :WBB5043 CREDIT AND SYNDICATED LOANS MANAGEMENT PROF FAOZIAH IDRIS AMINA OMAR MOHAMUD 88024 7 Cont… Writing in the October 1993 issue of Business Credit, for example, John S. Gordon suggested the following goals. International credit should seek to: Minimize bad debt losses. Minimize accounts receivable outstanding. Maintain financial flexibility Review you’re banking arrangements. Optimize the mix of company assets Cont.. :WBB5043 CREDIT AND SYNDICATED LOANS MANAGEMENT PROF FAOZIAH IDRIS AMINA OMAR MOHAMUD 88024 8 Cont.. Convert receivables to cash on a tim
