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Credit and collection

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credit and collection, talking about the fundamentals of credit

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Credit and collection

  1. 1. CREDIT AND COLLECTION
  2. 2. HISTORY OF CREDIT • Barter – exchange of goods or services without the use of money, or trade one thing with another with equal value • Modernization has allowed credits to transpire, since it has allowed free flow of heavy volumes of transactions (international borders)
  3. 3. CREDIT DEFINE • An arrangement to receive cash, goods or services now and pay later • To a Lender: this connotes trust To a Borrower: the capacity and willingness to pay • Transaction involving the transfer of goods, services, funds, property or rights, thereby creating an obligation on the part of those who receive them, that must be complied in the future (creditor and debtor)
  4. 4. Items that are being lend/credit • Goods – groceries, appliances,, medicine, hardwares (creditor/debtor) • Services – car repair, beauty parlors, electricity (creditor/debtor) • Funds – cash loans from pawnshops, banks, lending institutions, friend (lender/borrower) • Property – car(rent a car), beach house(real property) = (bailor/bailee) • Rights – possessions e.g. stocks, bonds, commercial paper, loan recievables
  5. 5. Credit and Collection • Credit – happens when a credit transaction is consummated or consented mutualy • Ownership – confers legal title to a property or right • Sale – a transfer of goods and services • Art 1458 civil code “ by the contract of sale one of the contracting parties obligates himself to transfer the ownership of goods or services and to deliver a determinate thing and the other to pay therefore a price in money or its equivalent”
  6. 6. When credit turn sour: • Goods delivered are spoiled or substandard • Services provided such as car repair are inadequate or technically defective • When prices, for either goods or services, were not clearly understood by both parties ( when price is not considered certain in money or its equivalent, there is no sale and the transaction is void – there being no mutual consent
  7. 7. Thank you ^__^

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