Any business which sells goods or provides services ‘on credit’ - that is, without receiving payment at once - is exposed to the very real risk that customers or clients might ‘default’, that is, not settle their debts when they fall due for payment. Such ‘bad debts’ can seriously affect the operations and profitability of a business, and so must be kept to the bare minimum. It is the important task of the credit manager and/or accounts managers and personnel, or the owner or manager of a small business, or an appointed official or executive of larger businesses - to formulate a ‘credit policy’ to
control and manage the credit extended to its customers or clients. The credit control process needs to be understood and followed, with adequate checks made on “creditworthiness” of new and existing customers, and ‘credit limits’ (how much credit is allowed and for how long) must be set. A major responsibility of a credit manager is to ensure debts are collected on time, that any signs a customer might default are acted upon early, and that any overdue debts are “chased” to avoid losses. This Program covers all those topics, and many more of great value to all businesses.
Course Outline Summary
- The meanings of key terms including: credit, credit policy, credit terms, credit limits, receivables, and more.
- The major forms of credit, and the benefits to manufacturers/producers, vendors and consumers of credit availability.
- Risks in allowing credit to customers.
- The importance of liquidity, the management of liquidity; methods of improving liquidity.
- Responsibilities of the credit control function.
- Internal and external sources of information about customers or clients.
- Financial analysis of customer accounts: liquidity and profitability indicators, financial position, cash flow, working capital.
- Using performance indicators for customers, using a credit scoring system and the shortcomings of credit scoring systems.
- Granting credit and setting up customer accounts; various factors which affect the decision to allow credit.
- Procedures for opening a new credit account.
- Reasons for and processes when refusing to grant credit.
- Changes in credit terms; interest penalties for late payments.
- The different types of discounts and, why they are offered.
- Credit insurance; overseas sales and export credit insurance.
- Customers and contracts; elements of contracts; offer and acceptance. Breaches of contract.
- Selling and statute law; trade descriptions acts, consumer credit acts.
- Methods of “chasing” and recovering outstanding debts.
- Monitoring and controlling customer accounts; useful techniques.
- Receivables and aged debtor reports.
- Doubtful and bad debts, provisions for doubtful debts. Writing off bad debts.
- Collecting debts and dealing with insolvency.
- Methods of collecting trade debts. Using third parties for debt collection.
- Taking a customer to court; legal terms, enforcement of judgments. Insolvency practitioners.
- Overview and review of Credit control policy.
