Management and Organizational Studies 2275A/B Chapter Notes - Chapter 26: Accounts Receivable, Trade Credit, Effective Interest Rate
5 Dec 2015
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Events of default failure by debtor to make required payments on a loan or to fulfill its other obligations under credit agreement. Methods used to reduce risk in credit transactions. Strong credit policies and procedures checking credit applications and references repo if not paid. Change it away from credit transaction i. e. lease-to-own instead of sale, can. Security / collateral property which a creditor takes an interest as security for a borrower"s promise to repay a loan. Assurances from other people guarantee from a more creditworthy person. Terms to require debtors to carry business in accordance with specific requirements. Security can be real property through a mortgage or personal property i. e. if money is borrowed to purchase equipment, collateral may be the equipment itself. Personal property security act (ppsa) applies to every transaction that creates a security interest, and some others (i. e. leases over one year) Credit advances must allow debtor to acquire the assets in which security interest is taken.
