Management and Organizational Studies 2310A/B Chapter Notes - Chapter 20: Credit Analysis, Collection Agency, Credit Risk

• School: Western University
• Department: Management and Organizational Studies
• Course: Management and Organizational Studies 2310A/B
• Professor: Shang Tang

Document Summary

Credit management and receivables: key issues, granting credit increases sales, costs of granting credit, chance that customers won"t pay. Can the company takes its products- items hold collateral value. Perishable items- collateral value decreases over time. Products that are well established generally have more rapid turnover. Newer or slower products have longer credit periods to entice consumers: cost, profitability, and standardization. The products that are cheaper have shorter credit periods. Can turn over faster: credit risk. The lower the credit rating, the shorter the credit terms - high credit risk. Smaller amounts can be collected quicker: competition. Highly competitive market, longer credit terms to attract customers: consumer type. Company can offer different terms depending on the consumer. If late on payments, company will send you a letter: telephone call. If still delayed, will receive a call: collection agency. Some companies will outsource their collection to a third party: third party would enforce the collection policy.