Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

Credit and Collection > Credit Management > Flashcards

Credit Management Flashcards

1
Q

“Remember, that money is of prolific, generating nature. Money can beget money, and its offspring can beget more, and so on… The more there is of it, the more there is of it, the more it produces every turning, so that the profits rise quicker and quicker”

A

Benjamin Franklin

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

the discipline of reviewing, analyzing and setting the term of requests for credit for a business

A

Credit Management

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

series of interlinked processes and workflows that allow your accounts receivable team to manage business’s cash flow by following up on payments and collecting overdue invoices ASAP

A

Credit Management

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

involves pursuing the payment of debts that are past due, process of contacting the borrower who owes the debt and negotiating a payment plan or requesting immediate payment in full

A

Debt Collections

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

Main Components of Credit Management

A

Assessing an approving new clients, Setting Payment terms, Extending credit to existing customers, Tracking customer credit

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

Primary Objective of Credit Management

A

Avoidance of excessive debt

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

Key objectives of Credit Management

A

Safeguarding Customer Risk, Settlement of outstanding balances, Improving cash flow

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

Functions of the Credit Department

A

Gathering Credit Information, Analyzing Credit Information, Credit Checking and authorization, Filing and Recoding, Credit Adjustments, Collection Correspondence

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

In charge of applying the standard tests and measurements for performance

A

Credit Analyst

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

Risk of repayment, the possibility that an obligor will fail to perform as agreed

A

Credit Risk

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

also a source of liquidity when used as collateral for borrowings

A

Loans

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

present primarily in the loan disbursements and credit administration processes

A

Transaction Risk

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

Risk associated with lending

A

Credit
Liquidity
Transaction
Compliance
Reputation

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

Primary Advantage of Credit Management

A

Business Continuity

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

Ensure that delinquent accounts are reconciled and paid in a timely, cost-effective manner

A

Collection Department

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

Factors to Consider in Deciding the Collection Department Structure

A

Based on Operational Duties,
Based on Skills

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

Based on Operational Duties

A

Frontline Contact Centre,
Back office,
Control Team

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

deals directly with customers

A

Frontline Contact Centre

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
19
Q

Accounting and Settlement Tasks

A

Back Office

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
20
Q

Centralizes all processes at the firm

A

Control Team

21
Q

Based on Skills

A

Evaluation of the operation volumes,
Evaluation of the responsibilities on all credit and collection procedure

22
Q

RACI Matrix

A

Responsible
Accountable
Consulted
Informed

23
Q

Customer Care Department

A

Responsible

24
Q

Finance

A

Accountable

25
Q

IT, Marketing Sales

A

Consulted

26
Q

VP Sales, Marketing, Finance

A

Informed

27
Q

Common staff of collection Department

A

Credit Analyst
AR Manager
AR Analyst/Collection Analyst/Collection Specialist
Collector/Collection Officer
Compliance Analyst/Collection Risk Management Specialist
Collections Consultant/ Treasurer

28
Q

Parameters that influence collection department structure

A

Volume of Invoices, Payments, Receivable Accounts
Number of Active Customers
Payment Methods

29
Q

Measure of the average number of days that it takes a company to collect payment for a sale

A

Day Sales Outstanding

30
Q

Importance of DSO

A

A key driver of cash flow,
A key indicator of a company’s financial health,
Factors that lenders and investors consider when evaluating a company’s creditworthiness,
Used to assess customer satisfaction

31
Q

(AR/Total Credit Sales) x Number of Days

A

DSO

32
Q

Ideal DSO

A

45 days

33
Q

DSO can be affected by:

A

Seasonal Fluctuations and Changes in credit terms

34
Q

He should know and understand the goals, objectives, and policies of the company, of the other company, of the other departments in the organization, and of his own department.

A

Competence and Capability

35
Q

A good credit man must have the ability to effectively convey his ideas.

A

Communication

36
Q

putting your attention on advantageous solutions, attempting to forge relationships that benefit both parties, and bringing value to the company. He must take a proactive and constructive stance when managing credit and collections.

A

Constructiveness

37
Q

He must keep pace with changing times and changing conditions.

A

Creativity

38
Q

He must be devoted and dedicated to his job.

A

Conscientiousness

39
Q

He must be consistent in making credit decisions.

A

Consistency

40
Q

He must not only act with certainty and accuracy but also with swiftness and speed.

A

Certitude and Celerity

41
Q

A credit man must have good skip tracing skills, maybe in the field or online, in order to gather and verify the information given by the customer.

A

Contact

42
Q

He must also have character, honesty, integrity, and reliability.

A

Character

43
Q

He must be trusted by the debtor to have reciprocity of confidence between the credit man and the customer.

A

Confidence

44
Q

He must have basic knowledge of computers and the ins and outs of information technology.

A

Computer Literate

45
Q

people equipped with pleasing personalities.

A

Congeniality

46
Q

handling the concern of customers regarding the credit process makes them feel that they are respected.

A

Considerateness

47
Q

He should have the fundamental capacity for perception, understanding, and judgment that is possessed by almost everyone.

A

Common Sense

48
Q
A

Credit and Collection (8 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2024 Bold Learning Solutions. Terms and Conditions