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Credit Investigations

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Topics covered are how to conform to the legal and ethical requirements of credit investigations, the difference between direct and indirect credit investigations, how to gather information, etc.

Veröffentlicht in: Business
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Credit Investigations

  1. 1. Credit Investigations Chapter Ten NACM
  2. 2. Learning Objectives <ul><li>How to conform to the legal and ethical requirements of credit investigations </li></ul><ul><li>What to do to open a new credit account </li></ul><ul><li>The difference between direct and indirect credit investigations </li></ul><ul><li>How to gather information in a direct and indirect credit investigations </li></ul><ul><li>How to gather foreign credit information </li></ul><ul><li>The importance of conducting credit investigations on existing accounts </li></ul><ul><li>How to use the internet as a source for credit information </li></ul>
  3. 3. Legal and Ethical Aspects of Credit Investigation <ul><li>Exchange of Credit Information – The Legal Perspective </li></ul><ul><ul><li>Antitrust in Credit Investigation </li></ul></ul><ul><ul><li>Conspiracy, Restraint of Trade, Joint Actions </li></ul></ul><ul><ul><li>Defamation in Credit Investigation </li></ul></ul><ul><ul><li>Libel and Slander </li></ul></ul><ul><ul><li>Defenses to Charge of Libel </li></ul></ul>
  4. 4. Legal and Ethical Aspects of Credit Investigation <ul><li>Exchange of Credit Information – The Ethical Perspective </li></ul><ul><ul><li>Confidential Nature of Credit Information </li></ul></ul><ul><ul><li>Summing Up Ethical Considerations </li></ul></ul><ul><ul><li>Company Policy </li></ul></ul>
  5. 5. Opening a New Credit Account <ul><li>The Credit Application </li></ul><ul><li>The Credit File </li></ul><ul><li>The Sales Department </li></ul><ul><li>The Financial Statement </li></ul><ul><li>Customer-Supplied Information </li></ul><ul><li>Third-Party Information </li></ul>
  6. 6. Credit Investigations Direct and Indirect <ul><li>Direct Investigations </li></ul><ul><ul><li>Creditor collects information through direct contact with customer </li></ul></ul><ul><li>Indirect Investigations </li></ul><ul><ul><li>Creditor collects information through a third-party </li></ul></ul>
  7. 7. Direct Investigation <ul><li>Sources of Direct Investigation </li></ul><ul><li>Trade References </li></ul><ul><li>Bank Information </li></ul><ul><li>Other Sources </li></ul><ul><ul><li>Voluntary Trade Group, Bankruptcy Court, Internet, Customer Website, Specialized Information </li></ul></ul>
  8. 8. Indirect Investigation <ul><li>Commercial Credit Reporting Agencies </li></ul><ul><li>NACM Affiliate System </li></ul><ul><li>Equifax Commercial Report </li></ul><ul><li>Experian </li></ul><ul><li>Dun & Bradstreet </li></ul><ul><ul><li>BIR </li></ul></ul><ul><ul><li>D & B Rating </li></ul></ul>
  9. 9. Investigating Existing Accounts <ul><li>When to Investigate an Existing Account </li></ul><ul><li>Methods of Contact </li></ul><ul><li>Sources of Information </li></ul>
  10. 10. International Credit Information <ul><li>Customer-Supplied Information </li></ul><ul><li>Bank Information </li></ul><ul><li>Exporter’s Foreign Sales Representative </li></ul><ul><li>Reporting Agencies </li></ul><ul><ul><li>FCIB-NACM Corporation </li></ul></ul><ul><ul><li>Organization for Economic Cooperation and Development (OECD) </li></ul></ul>
  11. 11. Know Your Customer Chapter Eleven NACM
  12. 12. Learning Objectives <ul><li>The importance of non financial analysis </li></ul><ul><li>How to apply the Five “Cs” of credit </li></ul><ul><li>The importance of the background of the principals and the business </li></ul><ul><li>How the debtor’s method of operation and industry characteristics affect creditworthiness </li></ul>
  13. 13. Know Your Customer <ul><li>Who is the Customer? </li></ul><ul><li>The Five “Cs” of Credit </li></ul><ul><li>Principals and the Nature of Business </li></ul>
  14. 14. The Five Cs of Credit <ul><li>Character </li></ul><ul><li>Capacity </li></ul><ul><li>Capital </li></ul><ul><li>Conditions </li></ul><ul><li>Collateral </li></ul>
  15. 15. Principals and the Nature of Business <ul><li>Importance of the Principals </li></ul><ul><li>Names of Principals </li></ul><ul><li>Business Experience and Ability Principals </li></ul><ul><li>Distribution Functions </li></ul>
  16. 16. Nature of the Business <ul><li>Business Name </li></ul><ul><li>Age and Reputation of the Business </li></ul><ul><li>Seasons </li></ul><ul><li>Changes in Operation </li></ul><ul><li>Location Factors </li></ul><ul><li>Lease or Own </li></ul>
  17. 17. Making Credit Decisions Chapter 12 NACM
  18. 18. <ul><li>Approval of credit for new customers </li></ul><ul><li>Establishing credit limits </li></ul><ul><li>Implementing credit limits for existing customers </li></ul><ul><li>How credit scoring is used to help manage credit accounts </li></ul>Learning Objectives
  19. 19. <ul><li>Making credit decisions using limited customer information </li></ul><ul><li>Conducting reviews of credit limits </li></ul>Learning Objectives (continued)
  20. 20. Accounts to New Customers <ul><li>Introduction </li></ul><ul><li>Approval of Small Initial Orders </li></ul><ul><li>Approval Based on Agency Ratings </li></ul><ul><li>Non-routine First Orders </li></ul><ul><li>Terms Other Than Open Account </li></ul>
  21. 21. Credit Availability and Limits for New/Existing/Repeat Customers <ul><li>Purpose </li></ul><ul><li>Credit Line vs. Credit Limit Availability </li></ul><ul><li>Underlying Factors </li></ul><ul><li>Influences on Credit Decisions </li></ul><ul><li>Methods for Establishing Credit Limits </li></ul>
  22. 22. Credit Availability and Limits for New/Existing/Repeat Customers <ul><li>Credit Scoring </li></ul><ul><li>Implementing Credit Limit Decisions </li></ul><ul><li>Communicating Credit Limit Decisions </li></ul><ul><li>Informing Customers of Credit Limits </li></ul>(continued)
  23. 23. Handling Marginal Business <ul><li>General Considerations </li></ul><ul><li>Profit Issues </li></ul><ul><li>Other Decision Factors </li></ul>
  24. 24. Decisions Based on Limited Information <ul><li>Reasons for Limited Information </li></ul><ul><li>Other Factors </li></ul>
  25. 25. Review of Credit Limits <ul><li>Regular Reviews </li></ul><ul><li>Improved Credit Situations </li></ul><ul><li>Changes in Business Conditions </li></ul><ul><li>Exceeded Credit Limit </li></ul>
  26. 26. Review of Credit Limits <ul><li>Extraordinary Credit Need </li></ul><ul><li>Extended Terms </li></ul><ul><ul><li>Establishing need for extended terms </li></ul></ul><ul><li>Overdue Accounts </li></ul><ul><li>Other Reasons for Reviews </li></ul>
  27. 27. <ul><li>Midterm Review </li></ul>
  28. 28. End of Session 5

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