Credit and Collection
TABLE OF CONTENTS
I. Title Page II. Introduction III. Abstract IV. Discussion V. Conclusion and Recommendation VI. Reference
ABSTRACT When assessing lending proposals banks apply certain general principles of good lending, often referred to as the canons of lending. Although not all of the principles can be applied by corporate credit managers to requests for trade credit, most are generally applicable. They provide an excellent framework for assessing all credit proposals. Because the purpose of lending is to earn interest and make a profit, it follows that principles of good lending should be concerned with ensuring, so far as possible, that the borrower will be able to make the scheduled repayments with interest, in full and within the required time period. Otherwise, the profit from any interest earned is reduced or even wiped out by the bad debt when the customer eventually defaults. Everybody needs to borrow money. Whether it is to buy a home or a car or to enjoy the convenience of a credit card, borrowing is as much as part of our daily lives as brushing our teeth or going to work or school. The problem is that borrowing money costs money. You have to pay interest on borrowed money to make loans worth a lender’s while. And if you are not paying attention you could end up paying more in interest than you did for something you originally bought on credit. It’s important to understand the nature of borrowing and the effective ways of collecting credits that will not affect the individual’s behaviour.
DISCUSSION I. Lending Proposition Lending basically is to provide anything material or money specifically temporarily on condition that the amount borrowed is returned, usually with an interest fee. (startupbizhub.com) The initial lending or borrowing proposition must come from the customer. The customer must ask to borrow a certain amount of money for a certain period of time and for a
I. Title Page II. Introduction III. Abstract IV. Discussion V. Conclusion and Recommendation VI. Reference
ABSTRACT When assessing lending proposals banks apply certain general principles of good lending, often referred to as the canons of lending. Although not all of the principles can be applied by corporate credit managers to requests for trade credit, most are generally applicable. They provide an excellent framework for assessing all credit proposals. Because the purpose of lending is to earn interest and make a profit, it follows that principles of good lending should be concerned with ensuring, so far as possible, that the borrower will be able to make the scheduled repayments with interest, in full and within the required time period. Otherwise, the profit from any interest earned is reduced or even wiped out by the bad debt when the customer eventually defaults. Everybody needs to borrow money. Whether it is to buy a home or a car or to enjoy the convenience of a credit card, borrowing is as much as part of our daily lives as brushing our teeth or going to work or school. The problem is that borrowing money costs money. You have to pay interest on borrowed money to make loans worth a lender’s while. And if you are not paying attention you could end up paying more in interest than you did for something you originally bought on credit. It’s important to understand the nature of borrowing and the effective ways of collecting credits that will not affect the individual’s behaviour.
DISCUSSION I. Lending Proposition Lending basically is to provide anything material or money specifically temporarily on condition that the amount borrowed is returned, usually with an interest fee. (startupbizhub.com) The initial lending or borrowing proposition must come from the customer. The customer must ask to borrow a certain amount of money for a certain period of time and for a
References: Coyle, Brian. (2000). Corporate Credit Analysis. Chicago and London: Fitzroy Dearbon Publishers. Coyle, Brian. (2000). Framework for Credit Risk Management. Chicago and London: Fitzroy Dearbon Publishers. Garmaise, Mark J. and Gabriel Natividad.(2010).“Information, the Cost of Credit, and Operational Efficiency: An empirical Study of Microfinance”, The Review Mueller, Karin Price. (2001). Online Money Management. Redmond, Washington: Microsoft Press.