Friday, January 21, 2011

Managing Credit and Accounts Receivable

Even if small companies may decide to grant loans to their clients. Sonb large credit subsidies as a way customers do business. About 1 6 / U.S. goods industrial society, clients of such loans is an important contribution to the U.S. and very practical investment loans to customers .. First you decide which customers are worth the investment.

Not every small business grants loans. Instead, they make a sale on a cash basis. In many cases, the cost of sales to customers that like it or not, we live in a society, to make loans. If the provider has to take orders from large companies that provide us the power of money to pay for everything in this case. To switch to another company unless your company is a small loan. Small businesses face a trade-off. They have a credit balance of costs to benefits from increased sales.

Most small businesses are two types of customers. These are the clients or the customer's B2B trade credit. Trade credit is simply an extension of other loan companies. Even small businesses have customers or clients B2C consumer credit, which is public.
What makes a company's credit policy?

When an enterprise cost-effective decision analysis is the most important credit to customers, and to prescribe the procedures, credit and collection expense. There are usually three parts of good credit policy:

1st Terms of sale

Terms of sale provides that the credit card business law clients are selling products or services. The company will require a cash sale or that it will extend credit? Decisions are made in the process of credit analysis to determine which will give credit.

If the business decides to grant credit to the customer, and then set the terms. These conditions include the credit period, and you decide to offer discounts to customers and the discount period.

With regard to the sales force, it seems that 2 / 10, 30 net. This means that you offer your customers a discount of 2% if paid by 10 days. If they do not discount the bill has only 30 days.

2nd Credit Analysis

In determining the credit policy, the company determined how they can provide credit to consumers and businesses. Method of doing this include pulling a credit report, at 5C credit appraisal and credit.

3rd Collection policy

When the company decided to offer credit to customers, to develop a collection policy, which would be used to monitor their credit account. Most companies use two approaches. They use the average collection period and the customer account aging times.

Collection medium (AKP) will leave the business owner knows how many days, on average, and gather enough credit. The business owner can be compared to AKP companies in other industries, and his AKP another year. AKP has a wealth of business and employment data. If the AKP is the business owner needs to take more aggressive in collecting against their loans.

Customer account aging schedule is a valuable tool. You can see a preview of what percentage of your credit card account at the end of some detainees are irekouvrabl. Between the elderly and the AKP schedule is relatively easy for a business owner must keep an eye on the credit account and repair issues that may affect the cash flow of the economy before they happen

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