Credit management Obiectives a Maximise the probability of receipt ■ Accelerate receipt
Credit Management Objectives ◼ Maximise the probability of receipt ◼ Accelerate receipt
Costs of Granting Credit ■ Opportunity cost ■ Administration costs ■ Bad debts Additional inventory Discounted value of sale
Costs of Granting Credit ◼ Opportunity cost ◼ Administration costs ◼ Bad debts ◼ Additional inventory ◼ Discounted value of sale
Benefit of granting credit Additional sales
Benefit of Granting Credit Additional sales
Costs of not granting credit ■上 oregon sales Higher security costs Higher insurance costs Loss of customer goodwill
Costs of NOT Granting Credit ◼ Foregone sales ◼ Higher security costs ◼ Higher insurance costs ◼ Loss of customer goodwill
Benefits of not granting credit Accelerated cash flows No bad debts or delinquent accounts
Benefits of NOT Granting Credit ◼ Accelerated cash flows ◼ No bad debts or delinquent accounts