OnGuard Dictionary
Select a credit management term to check the meaning of it
- Cashflow
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A measure of a company's financial health. Equals cash receipts minus cash payments over a given period of time; or equivalently, net profit plus amounts charged off for depreciation, depletion, and amortization.
- Collection agency
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A business that pursues payments on debts owed by individuals or businesses.
- Collections Management
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The act or process of collecting invoices in order to reduce the costs of working capital.
- Complaints Management
- Every organization has to deal with customer complaints that delay the payment of invoices. A slow completion of disputes influences the DSO but even worse, it can harm your relationship with your customer. A good and efficient complaints management, offers opportunities as every contact moment can be used to strengthen the relationship with your customer.
- Credit Management
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Credit management is a term used to identify accounting functions usually conducted under the umbrella of Accounts Receivables. It gives a information about the various factors that have a bearing on this process, besides looking at the responsibilities of the debtors with regards to credit management.
The term credit management means the various ways in which a debtor looks after the financial resources he or she might have received as credit. Proper credit management is important for the financial well-being of the debtor.
- Credit Rating or Score
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A credit rating estimates the credit worthiness of an individual, corporation, or even a country. A credit score is a numerical expression based on a statistical analysis of a person's or companies credit files, to represent the creditworthiness of that person or company. A credit score is primarily based on credit report information typically sourced from credit bureaus.
- Customer Intimacy
- Customer intimacy is a concept from marketing, which describes the ability of a supplier to become accepted and known as the regular partner with its customer. Customer intimacy creates a virtuous circle: the better the supplier knows the customer company with its objectives and difficulties, the better able he is to provide an optimal solution. The more adapted the supplier's product or service is, the happier the customer will be, and the stronger the "intimacy" between the two parties.
- Demand or Dunning Letter
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A formal notice demanding that the addressee perform a legal obligation, such as rectifying a problem, paying a sum of money or honouring a contractual commitment, on specific terms and within a specified time. The letter gives the recipient a chance to perform the obligation without being taken to court.
- DSO - Days Sales Outstanding
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DSO means Days Sales Outstanding: i.e. the number of days of sales (turnover) outstanding at this moment. Within this calculation the outstanding (debtor) amount is divided by the invoiced amount. The DSO does NOT give any insight in the ageing of your outstanding invoices.
- Installment
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A portion of a debt, or sum of money, which is divided into portions that are made payable at different times. Payment by installment is payment by parts at different times, the amounts and times being often definitely stipulated.
- Installment plan
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A credit system by which payment is made in installments over a fixed period of time.
- Judicial settlement
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A form of bankruptcy in which the debtor continues to manage his own affairs and may effect a composition (arrangement) with his creditors.
- Working capital
- A financial metric which represents operating liquidity available to a business, organization, or other entity, including governmental entity.
Working capital optimization is a focus for every CFO. Focus areas for reducing the cost of working capital have traditionally been inventory, accounts payable, cash management and accounts receivable.