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:

1. Payment History (rating:mostly prompt,prompt-slow and mostly slow),

2. Need of Customer’s business(rating:great,average and small),

3. Character of Management (rating:above average,average and below average),

4. Years in Business:(rating:more than 5 years,1-5 years and less than 1 year),

5. Bank Borrowing (rating:unsecured,none,unknown,secured by fixed assets,secured by current assets),

6. Competition (rating:heavy,average and below average),

7. Product Profitability (rating:high,average and low),

8. 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
• Why Should Credit Limit Be Imposed.Is it necessary for the company to inform the customer about its credit limit and credit terms?
• A Simple Credit Vetting Or Evaluation Checklist
• ALL TOPICS COVERED UNDER THE HEADING-CREDIT MANAGEMENT/CREDIT CONTROL
• Credit Management:Basic Collection Approaches,Types of Defaulters,Delaying Tactics and Signals for Potential Defaulters
• What Are The Roles/Function Of Credit Management Department