Non-Financial and Qualitative Factors in Credit Decision
Financial ratio have always been used to evaluate the credit worthiness of a new customer.
But, how about non-financial and qualitative factors that you as a Credit Manager might want to look for?
This should at least include the following:
- Payment History (rating: mostly prompt, prompt-slow and mostly slow),
- Need of Customer’s business(rating: great, average and small),
- Character of Management (rating: above average, average and below average),
- Years in Business: (rating: more than 5 years, 1-5 years and less than 1 year),
- Bank Borrowing (rating: unsecured, none, unknown, secured by fixed assets, secured by current assets),
- Competition (rating: heavy, average and below average),
- Product Profitability (rating: high, average and low),
- Credit’s manager assessment: (rating: comfortable, uncomfortable, very uncomfortable)
- What Factors To Consider When You Increase The Credit Limit Of A Customer
- Using Trade Reference As Part Of Credit Vetting Procedures
- A Simple Credit Vetting Or Evaluation Checklist
- Credit Management: An Overview, its Importance and Characteristic of a Company having a well run credit management department
- Credit Management:What is the KPA and KPI of a Credit Manager?
- Why Should Credit Limit Be Imposed.Is it necessary for the company to inform the customer about its credit limit and credit terms?
- Use The Corporate Guarantee Form When Granting Credit Facility To Your Customer Who Belongs To A Group of Companies
March 23, 2006
Tags: Credit control, Credit management
Posted in: CREDIT MANAGEMENT/CONTROL
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