INTRODUCTION IN CREDIT AND COLLECTION

Question 1

the trust that allows one party to provide money or resources to another party where that second party does not reimburse the first party immediately but promises either to repay or return those resources (or other materials of equal value) at a later date.

Answer 1

CREDIT

Question 2

the process of pursuing payments of debts owed by individuals or businesses. It involves the implementation of strategies and procedures to ensure that outstanding receivables are paid within the agreed terms.

Answer 2

COLLECTION

Question 3

is a set of guidelines that a company uses to determine the amount and type of credit to extend to customers. It includes the terms and conditions of credit sales, criteria for creditworthiness, and procedures for monitoring and collecting accounts receivable.

Answer 3

CREDIT POLICY

Question 4

TYPES OF CREDIT ANALYSIS

Answer 4

QUANTITATIVE ANALYSIS
QUALITATIVE ANALYSIS

Question 5

Involves the use of numerical data and statistical methods to assess creditworthiness. This includes analyzing financial statements, calculating credit scores, and using financial ratios.

Answer 5

QUANTITATIVE ANALYSIS

Question 6

Involves non-numeric factors such as the borrower’s reputation, industry conditions, and management quality. While this type of analysis is subjective, it complements quantitative analysis by providing a more holistic view of credit risk.

Answer 6

QUALITATIVE ANALYSIS