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Credit Management Criteria

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Discuss the usefulness of following criteria for credit management

1) Terms of sale

2) The promise to pay

3) Credit analysis

4) The credit decision

5) Collection policy

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The solution discusses:

Discuss the usefulness of following criteria for credit management

1) Terms of sale

2) The promise to pay

3) Credit analysis

4) The credit decision

5) Collection policy

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1) Terms of sale (also called a bill of sale)

How can a company function without a term of sale? A term of sale is a document that outlines the transfer of goods from seller to buyer. It is proof that the buyer is the owner of the property. The terms of sale document also outlines the terms, price of item, payment terms and date of transfer. This document lets the credit manager know what was sold, when it was sold, the amount of the sale and when payment is due. This information helps a company forecast and know its cash flow.

2) The promise to pay (also called a promissory note)

This is the legal binding document where the buyer agrees to pay the seller ...

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