Claims management

Several factors must be considered by management, if a policy of credit control is formulated as belonging to these groups:

• The administrative costs of collecting

• The procedures for the credit to individual customers and debt collection

• The amount of additional capital to finance and develop the total funding. There may be an increase in debtors, creditors, inventory and the net increase in working capital must be financed

• The cost ofadditional funding required for the volume of the borrower (or the savings from a reduction of debt) increases. These costs could be of interest to open or to establish long-term costs (local search as a stock or share capital)

• Any savings or additional resources for all in the amount of borrowing (or debt relief savings), these costs may need to open interest or the cost of money in the long term (Long search of our shares or capital) to increase the

• Any savings orAdditional expenses in the operation of credit policy (for example, overtime in the search for non-taxpayers)

• how the policy could be implemented credit. For example, (1) Credit may, taking a longer period to adjust their accounts to be relaxed. The cost would increase the debt. (2) A discount can be offered for prompt payment. The cost would be the amount of the discount will be taken.

• The effects of the relaxation of credit could(1) To promote a higher percentage of bad loans. (2) The increase in sales volume.

Provide the additional premium for the growth of gross sales, rising costs of fixed costs. deductions to alleviate suffering and the financial result of an increase in working capital for policy and terms of the loan would be profitable.

Some of these factors in credit decisions are now being examined in detail.

The policy of debt collection

Collections of total debtTurning to the enterprise policy that the administrative costs and other costs incurred to collect the benefits do not cover the costs of his superior.

Part of the extra costs in the debt collection process could

1. Reduce bad debt

2. Reduce the collections so that the average cost of investment and spending.

From a certain level of spending, but require an additional cost of collection is not enough influence on the dubious orto justify the DSO, the additional administrative costs.

collection process

The three main areas to be considered regarding the control of the debtor are considered;

1. Procedures.

2. Collection.

3. credit check.

sales documents must be processed quickly and accurately.

• Invoices must be sent immediately after birth

• Cheques should be made to ensure that invoicesexact

• Investment of queries and complaints and, where appropriate, the matter of the charges as soon as possible.

• Where practical, a monthly must be early, so that the old elements of the statement of monthly bills for customers could be included.

Total credit

To determine whether it is advantageous to expand the level of total credit granted, must be evaluated;

• The additional income, a credit policy more favorable thanstimulate

• The return on sales of extra

• The extra length of the average debt collection

• The return on investment required in additional charges.

Discount Policy

Variation of the discount for early payment of debt

• DSO

• The volume of demand (and therefore may indirectly refer to non-performing loans)

To see if the offer of discounts for prompt paymentEconomically, we must compare the cost of the discount with the advantage of reduced investment in receivables.

Default Risk

credit policy can have different degrees of risk. Higher revenues due to easier credit terms should be profitable enough to avoid the costs of:

• bad debts

• The additional investment to get more sales.