By:REENA HOODA

GoodsCredit Trade sold on credit

Cash receive in future

Receivable

Risk

Receivable
Economy Value Cash receive in future

COMPITITON

RELATIONSHIP WITH DEALERS

REASON FOR GRANT CREDIT

MARKETING TOOL

BUYERS REQUIREMENT

BENEFIT S

COST

BENEFIT S

Default cost
Delinquency cost

Capital cost
Collection cost

Collection Cost

Average Collection Period

Factors

Sales Volume

Bad Debt Expenses

EFFECT OF RELAXATION STANADARDS

ITEM
Direction of change
(increase

=I

Effect on profit (positive + and negative - )

DECREASE =
D) Sales Volume

I(D)

+( -)

Average Collection Period Bad Debt

I(D)

-(+)

I(D)

-(+)

Credit investigation process Obtaining credit information Analysis credit information

Credit information

External

Internal

Trade references

Bank references

Past record and references

 Quantitative Qualitative

Credit Terms

Credit period

Cash discount

Cash discount period

Effects of increase in cash discount

ITEM
Direction Of Change (I= increase , D= Decrease)
I D D D

Effect on profit
(Positive or negative -)

Sales volume
Average collection period Bad debt expenses

+
+

+ _

Profit per unit

Collection period

Degree of collection efforts

Types of collection efforts