O'Reilly logo

Fundamentals of Financial Management, Third Edition by Vyuptakesh Sharan

Stay ahead with the world's most comprehensive technology and business learning platform.

With Safari, you learn the way you learn best. Get unlimited access to videos, live online training, learning paths, books, tutorials, and more.

Start Free Trial

No credit card required

10.3 SELECTION OF CUSTOMERS

Apart from the formulation of a general credit policy for the firm, it is equally important to know to whom and to what extent credit facilities are to be offered. A firm takes the following steps in selecting its customers:

  1. Collecting necessary information
  2. Analysis of the information
  3. Fixation of the credit limit

10.3.1 Collecting Necessary Information

For extending credit to a customer, the firm must ensure that the financial background and the payment habits of the customer are good enough to honour bills. To this end, it needs to collect the necessary information about the customer. However, the process of collecting information suffers from two problems. First, collecting credit information involves expenses ...

With Safari, you learn the way you learn best. Get unlimited access to videos, live online training, learning paths, books, interactive tutorials, and more.

Start Free Trial

No credit card required