Append below a simple credit evaluation checklist:
What Do We Evaluate
| What Do We Look For | Sources of Information |
| Who are the directors | Director(s) name &Identification or Passport | Form 49 (Malaysia) –filing in Registrar of Companies |
| Majority shareholders | Is this a subsidiary of a more reputable company? (Can we also get a Corporate guarantee?)Is it linked to holding or associated companies that have very bad credit status in the market? | Form 24 (Malaysia) –filing in Registrar of Companies |
| Size of company | Total number of employees Annual Turnover | Credit Application Form |
| Type of company | (a)Legal Constitution: Sole proprietorship,partnership,private or public listed status, (b)Holding company/Associated/Subsidiary | Credit Application Form |
| Trade Reference | Fellow companies that we know that we can called to ask, Any names of reputable suppliers that are presently giving credit to the applicant, | Business Trade Reference, Association of Credit Bureau. |
| Credit Rating/Monitoring Agency | Bankruptcy Winding Up Petition | Registrar of Companies |
| Capital Authorised Paid-up | Too “little” capital re:overtrading (against its sales) | Audited Financial Statements and Annual Returns |
| Ability to pay | Net Tangible Assets Quick Asset Ratio Current Asset Ratio | Audited Financial Statements |
| Viability of Company | PBT | Audited Financial Statements |
| Collection Period | Average Debtors day | Audited Financial Statements |
| Payment Period | Average Creditors day | Audited Financial Statements |
| Guarantee Available | Corporate guarantee Personal guarantee Joint &severally Bank guarantee | Credit Application Form showing type and shareholding status |
| No. of years trading | Date of Incorporation Date of Commencement of business | Credit Application Form |
- Credit Evaluation Criteria
- Use The Corporate Guarantee Form When Granting Credit Facility To Your Customer Who Belongs To A Group of Companies
- Using Trade Reference As Part Of Credit Vetting Procedures
- Non-Financial and Qualitative Factors in Credit Decision
- Sample Of A Bank Guarantee Agreement Used in Credit Control/ Management
- ALL TOPICS COVERED UNDER THE HEADING-CREDIT MANAGEMENT/CREDIT CONTROL
- Why Should Credit Limit Be Imposed.Is it necessary for the company to inform the customer about its credit limit and credit terms?
FCCA,CA(MIA)with more than 26 years of post-qualifying working experiences. Previous working stints with one of the big accounting four,Regional GFC & Group Treasurer in a group of Malaysian and Group CFO in Singapore public listed concern.Also author to another very popular free educational accounting cum finance blog:http://basiccollegeaccounting.com under the branding of College Accounting Coach.
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