Significant Notes For Credit And Collection PDF

***[SIGNIFICANT NOTES FOR CREDIT AND COLLECTION]*** +-----------------------------------------------------------------------+ | The main objective of credit policies within a company is to maximize | | profits and minimize bad debts. | +========================...

***[SIGNIFICANT NOTES FOR CREDIT AND COLLECTION]*** +-----------------------------------------------------------------------+ | The main objective of credit policies within a company is to maximize | | profits and minimize bad debts. | +=======================================================================+ | Increased staff turnover is NOT listed as an advantage of written | | credit policies. | +-----------------------------------------------------------------------+ | Personal opinions of employees is NOT included when developing credit | | policies. | +-----------------------------------------------------------------------+ | Seller over-extension is a factor that influences restrictive credit | | policies. | +-----------------------------------------------------------------------+ | Checking orders for credit is one of the routine functions performed | | by credit personnel. | +-----------------------------------------------------------------------+ | In credit procedures, the credit risk is primarily evaluated during | | the credit granting process. | +-----------------------------------------------------------------------+ | The ideal balance for a company\'s credit policy is between liberal | | and restrictive? | +-----------------------------------------------------------------------+ | A key task of a credit manager is handling special collection | | problems. | +-----------------------------------------------------------------------+ | Effective communication of credit policies is essential for ensuring | | compliance and understanding. | +-----------------------------------------------------------------------+ | A good credit policy encompass basic company objectives of maximizing | | sales and reducing losses due to bad debts. | +-----------------------------------------------------------------------+ | The primary responsibility of a collector is to contact delinquent | | customers | +-----------------------------------------------------------------------+ | Physical strength is NOT emphasized as important for a collector. | +-----------------------------------------------------------------------+ | #### It is advantageous for a collector to have a pleasant personalit | | y because it creates a positive atmosphere conducive to collection. | +-----------------------------------------------------------------------+ | Flag their files and send a reminder letter to the one who signs | | checks is one method to handle a "careless" customer according. | +-----------------------------------------------------------------------+ | A collector must provide leniency and understanding in dealing with a | | financially distressed customer. | +-----------------------------------------------------------------------+ | Participation in outside training courses is one suggested approach | | to improve a collector's skills. | +-----------------------------------------------------------------------+ | #### The role of a collector is critical in a business because they n | | eed to ensure that cash inflow is continuous for smooth operation. | +-----------------------------------------------------------------------+ | Collectors should have an adequate academic background to prepare for | | higher positions in the organization. | +-----------------------------------------------------------------------+ | Perennial discounter type of customers requires the collector to be | | particularly firm. | +-----------------------------------------------------------------------+ | Focusing too much on selling can lead to a business\'s failure in | | terms of collection policies. | +-----------------------------------------------------------------------+ | Credit analysis evaluates key financial elements of a company such as | | assets, liabilities, and equity. | +-----------------------------------------------------------------------+ | Financial ratios important in credit analysis because they measure | | the company's performance efficiency. | +-----------------------------------------------------------------------+ | \"Capacity\" to pay is considered the most critical factor in credit | | evaluation because it assesses the borrower's cash inflows and | | ability to repay. | +-----------------------------------------------------------------------+ | #### \"Conditions\" influence credit decisions by analyzing the exter | | nal environment and loan purpose. | +-----------------------------------------------------------------------+ | Historically, character was most emphasized in credit granting. | +-----------------------------------------------------------------------+ | #### Credit history critical in financial decisions because it determ | | ines a borrower's likelihood of repayment. | +-----------------------------------------------------------------------+ | #### The Five C's of Credit aim to evaluate collectively a borrower's | | ability and willingness to repay debts. | +-----------------------------------------------------------------------+ | Capacity evaluates cash inflows, while collateral secures loans with | | assets. | +-----------------------------------------------------------------------+ | #### It is important to have low debt-to-credit ratios because it inc | | reases the likelihood of loan approval. | +-----------------------------------------------------------------------+ | If a borrower defaults on their loan, collateral is the \"second way | | out\" for lenders. | +-----------------------------------------------------------------------+ | A borrower demonstrate character in credit evaluations by having a | | strong repayment history. | +-----------------------------------------------------------------------+ | The primary purpose of a credit and collection policy is to document | | steps for managing credit and collections. | +-----------------------------------------------------------------------+ | Guaranteeing a profit margin is NOT a benefit of having a | | well-written credit and collection policy. | +-----------------------------------------------------------------------+ | To ensures consistency and efficiency in collections is the main | | benefit of documenting steps and communication in a credit policy. | +-----------------------------------------------------------------------+ | Evaluating credit risk is the core function of credit granting. | +-----------------------------------------------------------------------+ | Updating credit information is considered vital because it allows for | | better customer relations. | +-----------------------------------------------------------------------+ | Credit application and interview is the first step in the operations | | of credit procedures. | +-----------------------------------------------------------------------+ | The \"purpose\" section of a credit and collection policy include | | basic governance framework of the policy. | +-----------------------------------------------------------------------+ | Customer\'s anticipated purchasing volume is a key consideration when | | setting credit limits. | +-----------------------------------------------------------------------+ | Credit and collection policy must be updated routinely to adapt to | | changing market conditions. | +-----------------------------------------------------------------------+ | The primary purpose of the Credit Information Corporation (CIC) is to | | collect and disseminate credit information. | +-----------------------------------------------------------------------+ | To provide loans to borrowers with poor credit histories is NOT a | | function of the CIC. | +-----------------------------------------------------------------------+ | Borrowers have the right to access and dispute information in their | | credit reports. | +-----------------------------------------------------------------------+ | Under RA 9510, authorized entities can access credit information for | | specific purposes. | +-----------------------------------------------------------------------+ | Threatening actions that are not legally permissible is a prohibited | | debt collection practice. | +-----------------------------------------------------------------------+ | Publishing personal information about a borrower's debt allowed if | | the borrower provides written consent. | +-----------------------------------------------------------------------+ | Lending companies must outsource debt collection to third-party | | agencies when they ensure the agencies comply with the law. | +-----------------------------------------------------------------------+ | #### Severe violations of debt collection rules may result in revocat | | ion of the company's authority to operate. | +-----------------------------------------------------------------------+ | It is not true that credit policies are exclusively the | | responsibility of the credit manager within a company. | +-----------------------------------------------------------------------+ | Written credit policies are generally preferred over unwritten ones | | due to their distinct advantages. | +-----------------------------------------------------------------------+ | It is not true that the internal situation of a company has little | | effect on the reliability of its credit policies. | +-----------------------------------------------------------------------+ | It is not true that a good credit policy should be implemented | | without any assignment of responsibilities. | +-----------------------------------------------------------------------+ | Policies should be monitored closely and revised to suit current | | situations. | +-----------------------------------------------------------------------+ | The ideal credit policy varies significantly from one industry to | | another. | +-----------------------------------------------------------------------+ | Character refers to the general impression the customer makes on the | | lender, including their trustworthiness and business experience. | +-----------------------------------------------------------------------+ | Lenders consider collateral as a secondary repayment source in case | | the borrower defaults on the loan. | +-----------------------------------------------------------------------+ | Capital represents the money personally invested in the business by | | the borrower, demonstrating their commitment to the business. | +-----------------------------------------------------------------------+ | Historical perspectives indicate that character was once considered | | the most critical factor in credit decisions. | +-----------------------------------------------------------------------+ | It is not true that the credit evaluator's judgment relies solely on | | the numerical data provided in the credit application. | +-----------------------------------------------------------------------+ | Payment history on existing credit relationships is an indicator of | | future payment performance. | +-----------------------------------------------------------------------+