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During the credit vetting process of granting a new credit facility or additional credit amount to the customer, you might notice from the Application Form that a particular customer belongs to a group of companies. You might find that the credit […]

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In my article on the Role of Finance, I have included a topic on Targeted Performance Management (TPM).
By setting targets to the credit personnel employee, this will directly enable the objectives of the company to be achieved. The employee himself/herself will […]

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Costs in Extending Credit:
Do you know what are the costs in extending credit? Well, let’s hope that your answers include the following:

Cost of capital tied up in debtors,
Cash discounts,
Staffing costs of sales, ledger administration,
Expenses on printing, stationery, postage, space, equipment, etc.
Debt […]

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Setting DSO target for Cash Collection

What if my director said to me, “I want you to achieve only 70 Days Sales Outstanding for this coming month September 2005.” How then do I calculate the cash required to achieve 70 DSO?
Illustration:
Assuming that […]

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Basic Collection Approaches:
There are many ways to try to collect. Do you know them?
Collection approaches can be broadly classified into:

Persuasion, e.g. “Pay now because it’s better for you…”
Coercion, e.g. “We’ll have to take other forms of action……….”
Education, e.g. “Your payment isn’t […]