-
7/29/2019 crecol
1/7
Credit Credit is the trust which allows one
party to provide resources to another
party where that second party doesnot pay the first party immediately(thereby generating a debt), but insteadarranges either to repay or return those
resources (or other materials of equalvalue) at a later date.
-
7/29/2019 crecol
2/7
Credit The resources provided may be financial
(e.g. granting a loan), or they may consist
of goods or services (e.g. consumercredit). Credit encompasses any form ofdeferred payment.
Credit is extended by a creditoralso
known as a lender, to a debtor, alsoknown as a borrower.
-
7/29/2019 crecol
3/7
Duties of Credit Manager Days Sales Outstanding (also
called Days Receivables) is a calculation
used by a company to estimate theiraverage collection period.
A low number of days indicates that thecompany collects itsoutstanding receivables quickly.
Typically, Days sales outstanding iscalculated monthly.
-
7/29/2019 crecol
4/7
Duties of Credit ManagerThe days sales outstanding (DSO) figure is
an index of the relationship between
outstanding receivables and credit accountsales achieved over a given period.
The Days sales outstanding analysis
provides general information about thenumber of days on average that customerstake to pay invoices.
-
7/29/2019 crecol
5/7
Duties of Credit Manager Controlling bad debt exposure and expenses, through
the direct management of credit terms on thecompany's ledgers.
Maintaining strong cash flows through efficientcollections.
The efficiency of which is measured using Days SalesOutstanding (DSO).
Ensuring an adequate Allowance for DoubtfulAccounts is kept by the company.
Monitoring the Accounts Receivable portfolio fortrends and warning signs.
-
7/29/2019 crecol
6/7
Duties of Credit Manager Ensuring an adequate Allowance for Doubtful
Accounts is kept by the company. Monitoring the Accounts Receivable portfolio for
trends and warning signs. Enforcing the Stop List. Setting and ensuring compliance with a corporate
credit policy.
Obtaining security interests where necessary, such asa Debenture or a Cross Company guarantee, againstcredit extended.
Initiating legal or other recovery actions against non-payers.
-
7/29/2019 crecol
7/7
Types of Credit Manager Credit managers tend to fall into one of two groups
due to the differing specialty legal and jurisdictionalknowledge required.
Commercial Credit Managers
Consumer Credit Managers
large companies which sell to both markets will
require a Credit manager familiar with both aspects ofCredit management.