Unit 4462: Credit Management

1. Introduction to Credit Management

• Definition and scope of credit management
• Importance of credit management in business sustainability
• Key concepts: credit risk, credit terms, credit control, credit policies
• Overview of assessing and revising credit management practices

2. Types of Credit

• Trade Credit
  • Definition and characteristics
  • Advantages and disadvantages for businesses
• Bank Loans
  • Types of loans (term loans, revolving loans, etc.)
  • Loan application process and typical terms
• Credit Cards
  • Usage for individuals and businesses
  • Interest rates, fees, and payment terms
• Lines of Credit
  • Definition and practical applications
  • Differences from loans and credit cards

3. Credit Risk Assessment

• Importance of credit risk evaluation
• Assessing creditworthiness of customers
  • Qualitative factors (character, capacity, collateral)
  • Quantitative factors (financial ratios, payment history)
• Analyzing financial statements
  • Balance sheet, income statement, cash flow analysis
• Credit Scoring Models
  • Overview of scoring systems
  • Application and interpretation

4. Credit Policies and Procedures

• Purpose of credit policies
• Components of effective credit policies
  • Credit approval process
  • Credit limits and terms of payment
  • Documentation and record keeping
• Implementing credit procedures
  • Roles and responsibilities
  • Communication with customers

5. Credit Monitoring and Control

• Techniques for monitoring credit exposure
• Tracking customer payment behavior
• Tools for credit control
  • Aging schedules
  • Credit management software
• Measures to mitigate credit risk
  • Early warning systems
  • Adjusting credit limits and terms

6. Credit Decision Making

• Factors influencing credit decisions
  • Customer financial health
  • Industry and economic conditions
  • Cash flow impact and profitability considerations
• Setting credit limits and payment terms
• Balancing risk and opportunity in credit granting

7. Credit Recovery Strategies

• Managing delinquent accounts
• Negotiation techniques with overdue customers
• Legal actions and debt collection processes
• Debt restructuring options
• Role of collection agencies

8. Credit Reporting and Compliance

• Importance of accurate credit reporting
• Regulatory frameworks
  • Fair Credit Reporting Act (FCRA) overview
  • Data protection and privacy considerations
• Ensuring compliance and data accuracy
• Handling disputes and corrections

9. Case Studies in Credit Management

• Real-world examples illustrating:
  • Successful credit management practices
  • Challenges faced and solutions applied
  • Lessons learned and best practices
• Group discussions and analysis
• Application of theory to practice