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- Forecasting Cash Inflows; Cash Forecasting; Collections Forecasting
- Avoiding Credit Fraud
- Credit Scoring Models; Credit Models; Credit Risk Models; Decision Support Software
- Managing Marginal Credit Risks
- Handling Difficult Credit Applicants
- Non-Financial Credit Risk Analysis
- Understanding Accounts Receivable Costs
- Accounts Receivable Forecasting
- Informing Customers of their Credit Limits
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- Bank Loans and Bank Credit
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- Bounced Checks; Collecting on Bounced Checks, NSF Checks
- Business Credit; Trade Credit; Open Account Credit Terms
- The Five Cs of Credit Analysis
- Check Acceptance
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- Classification of Risk; Customer Risk Score
- COD Terms; Slow Pay; High Risk; Risk Mitigation;
- Code of Ethics
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- Consumer Credit Granting
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- Customer Purchase Orders, Errors on POs and their Impact on Collections
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- Grace Periods and Cash Discounts
- Direct and Indirect Credit Investigations
- Unearned Discounts; Unearned Cash Discounts; Cash Discounts
- Enterprise Resource Planning
- Ethics for the Credit Manager
- Evaluating Financial Health
- Exchange of Credit Information
- Extended Dating Terms
- Credit File Documentation
- Fraud Signs and Prevention
- History of Credit
- Cargo Insurance
- Insurance Brokers and Credit Insurance
- Internet as a Source of Credit Information
- Late Charges
- Minimum First Order Without Credit Investigation
- New Account Checklist
- Non-Disclosure Agreement
- Open Account Sales; Open Account Terms; Extension of Credit on Open Account Terms
- Order Approval; Order Hold; Credit Reviews; Pending Order Review
- Order Controls / Order Approval
- Pro Forma Invoices
- Requesting Financial Information from Customers
- Restrictive Endorsements
- Returned Checks
- Return Merchandise Authorizations
- Root Cause Analysis of Past Due Balances
- Safeguarding Accounts
- Security Agreements; Secured Debts
- Seller's Invoice
- Terms and Conditions
- Terms of Sale
- Terms of Sale: Examples
- Types of Credit: Consumer Credit; Bank Credit; Commercial Credit; B2B; Business to Business
- Written Credit Policy Manual
- Handling Post Audit Claims More Effectively; Post Audit Claims
- Do's and Don'ts of Business to Business Debt Collection, Debt Collection Practices
- Bad Debt Reserves
- Advantages and Disadvantages of Purchasing Credit Insurance
- A Letter of Introduction
- Addressing Chronic Slow Pay Customers
- More about Cash Forecasting
- Streamlining Order Processing
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- Exporting
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Non-Financial Credit Risk Analysis
Financial statements offer a unique perspective into a debtor's liquidity, profitability and solvency. However, any discussion of credit risk management would be incomplete without applying the "Four C's of Credit" to the credit decisionmaking process. The four C's refer to Character, Capacity, Capital and Conditions. Conditions refer to the general economic condition of the country. Conditions should also refer to the specific condition of the creditor company and the industry in which it competes.
Capital refers to the financial capacity of the company, and more specifically its ability to pay debts as they come due. It is best evaluated based on a careful study of a customer or applicant's financial statements.
Capacity refers to an assessment the credit professional must make about the customer or applicant's ability to continue to operate as a going concern. Another aspect of Capacity that must be gauged by the credit manager is the capacity of senior management to control and to manage all aspect of the company's business.
Character refers to the reputation of management along with their history and business experience. The evaluation involves an assessment by the credit manager of the moral character of the owners or management of the company, and an assessment of their desire or intention to pay trade creditors on time.
© 2011. Michael C. Dennis. All Rights Reserved.