revfin

Amounts of money owed to a firm by customers who have bought goods or services on credit.

• Accounts Receivable

• Credit Standard

• Accounts Payable

• Credit Period

The minimum quality of creditworthiness of a credit applicant that is acceptable to the firm.

• Credit standard

• Credit Terms

• Credit Period

• Cash discount

The total length of time over which credit is extended to a customer to pay a bill.

• Credit standard

• Credit Terms

• Credit Period

• Cash discount

The period of time during which a cash discount can be taken for early payment.

• Cash discount

• Credit Period

• Cash Discount Period

• Credit Terms

A percent reduction in sales or purchase price allowed for early payment of invoices. It is an incentive for credit customers to pay invoices in a timely fashion.

• Cash discount

• Credit Period

• Cash Discount Period

• Credit Terms

Credit terms that encourage the buyer of seasonal products to take delivery before the peak sales period and to defer payment until after the peak sales period.

• Seasonal dating

• Default Risk

• Standard credit terms for all products.
• Discounted payment terms for bulk purchases.

The amount of information collected should be deter mined in relation to the expected profit from an order and the cost of investigation. More sophisticated analysis should be undertaken only when there is a chance that a credit decision based on the previous stage of investigation will be changed.

• Information collection should be based solely on the cost of investigation.
• Sequential Investigation Process

• Sophisticated analysis

• Information collection should be proportional to expected profit and investigation cost.

A system used to decide whether to grant credit by assigning numerical scores to various characteristics related to creditworthiness.

• Credit approval algorithm
• Loan assessment tool
• Financial risk calculator
• Credit scoring system

A limit to the amount of credit extended to an account. Purchaser can buy on credit up to that limit.

• Credit limit
• Line of credit

• Credit account
• Credit score

Method that controls expensive inventory items more closely than less expensive items.

• ABC method of inventory control

• Economic order quantity

• Order Point

• Safety stock