What is credit management?
Credit Management is a term used to identify accounting functions usually performed under the umbrella of receivables on accounts. In principle, this collection of processes involves qualifying for the customer's loan, monitors income and logging of payments on outstanding invoices, start collecting procedures and dispute procedures or questions about the customer invoice. In the effective functioning of loan management, it serves as an excellent way to remain financially stable.
The loan management process begins with the precise evaluation of the Customer Base. This is particularly important if the company decides to expand a certain type of credit line or revolving loans to some customers. The correct credit management requires the determination of specific criteria that the customer must meet before receiving this type of credit agreement. As part of the evaluation process, there is also a loan management to determine the total credit line, which will be extended to the customer.
Several factors with afterIt uses as part of the credit management process to evaluate and qualify the customer to accept a form of commercial loan. This includes the collection of data on the current financial situation of a potential customer, including the current credit score. The current ratio between income and outstanding financial obligations will also be taken into account. The competent loan administration not only seeks to protect the seller from possible losses, but also to protect the customer from the creation of larger debt obligations that cannot be balanced in time.
After determining the credit limit for the customer, the credit management focuses on providing accurate and timely statements or invoices. Invoices must be delivered to the customer for a reasonable date of due date, providing the customer a reasonable period that would suit the terms of purchase. The period between the delivery of the invoice and the due date should also allow sufficient time per customer to getHe reviewed the invoice and contact the supplier if there are questions or concerns about the line item on the invoice. This allows all parties concerned to review the question and some type of solution.
When the loan management process works efficiently, everyone has participated in the benefits of effort. The seller has a reasonable amount of certainty that the invoices issued to the client will be paid in the conditions or that regular minimum payments will be accepted for credit account balances. Customers have the opportunity to build a strong relationship with the supplier and thus create a solid credit link.