Chapter 1 Flashcards
is an arrangement to receive cash, goods or services now and pay for them later.
Credit
it connotes trust on the borrower’s capacity and willingness to pay
To a lender
it is the ability to obtain goods or services in exchange for a promise to pay
To the borrower
defines as a transaction involving the transfer of goods, services, funds, property, or rights, thereby creating an obligation on the part of those who receive them, that must be complied with in the future
Credit
2 parties
Creditor and debtor
providing the goods, services, funds, property, or a right
Creditor
who receives any of them, will have the obligation to comply with this obligation by promising to pay for them in cash, in kind or to return the thing borrowed
Debtor
Goods. Groceries, appliances, medicines, hardware
Creditor, debtor
Services. Car repair, beauty parlor services, electrical current
Creditor, debtor
Funds. Cash loan from a pawnshop, bank, or a friend
Lender, borrower
Property. A hammer for a temporary use by a neighbor, a car for use in an errand (personal property); a beachhouse for use for a weekend (real property)
Bailor, bailee
Rights. Possession or use of a commercial store space bonds, stocks, commercial paper, loan on receivables
Lessor, lessee
also a transfer of goods or services, etc.
Sale
Civil Code says: “by the contract of sale one of the contracting parties obligates himself to transfer the ownership of goods or services and to deliver a determine thing and the other to pay therefore a price in money or its equivalent”
Article 1458
Transfer of possession
Delivery
consummated by mutual consent and the non-payment of rent on due date is certainly not intended by the lessor or owner of the rental property
Credit Transaction
time allowance to pay a rental beyond the due date
Grace period
An approach, where a credit and collection manager reacts to problems as they occur, oftentimes applying “band-aid” solutions, is not suggested.
System approach
When a transaction is consummated and all parties are satisfied, there is no reason to be concerned. But since a transaction could turn sour, or pose a problem, or even create a legal dispute.
Reasons for concern
managers and employees respond to problems as they arise on…
Touch and go basis
should be capable of being handled with ease by the employees
Credit and collection system
Essentials of credit (3)
Amount
Promise to pay
Determinable future date
