Paper Topic:

dont need one

Running Head : THE CREDIT DECISION

THE CREDIT DECISION

Write Your Name Here

Institute Name here

Instructor 's Name

Class

Date

HOW DOES A BUSINESS DECIDE WHETHER TO GRANT A CUSTOMER CREDIT AND HOW MUCH TO GRANT

A lot of businesses , especially small businesses , rely on their gut feelings and instinct when deciding whether to grant a customer credit or not . This is not only dangerous , it can also be disastrous as failure to acquire the money from the customer can be detrimental to the financial position of

the business , especially a small one . Assessing the credit worthiness of the customer is thus extremely important and every business should follow a very structured approach in to decide who to extend credit to and how much

Before the business goes on to decide who to give loan to or not , it should have its own formal credit policy in place . Having a policy makes the process more structured and makes the decision to lend or not an easier and a more objective one . Once this has been done , the business can do various different things in to decide whether to grant credit to a customer or not

1 . Get a credit application filled by the customer . This application should inquire various aspects in to get a deep insight into the customer , including his business background , years into business business operations , extent of credit , equity base , loans outstanding bank details etc

2 . The business should also look into the trade...

4 pages

36.0 KB

Free sing-up