Remove Bad Debt Remove Credit Management Remove Credit Risk
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How Are Your Customers Doing?

Your Virtual Credit Manager

This company was fortunate to avoid significant bad debt loss until Ames Department Stores, Kmart, and Fleming Foods (a distributor) all filed bankruptcy within the same year. Bad debt losses were understandably huge. Your Virtual Credit Manager is a reader-supported publication.

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Tackling Customers that Always Pay Late

Your Virtual Credit Manager

This creates cash flow shortages, an increased risk of bad debt, and a significant work requirement to mitigate the impact of late payments. Those who are financially weak (high credit risk), in addition to essentially turning down the faucet for your cash inflow, present a higher risk of never paying for everything they owe.

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Gain Leverage Over Slow Paying and Risky Customers by Holding Up Their Orders

Your Virtual Credit Manager

Meanwhile, customers who previously were approved during your initial credit evaluation may become past due, max out their credit limit, or, worse yet, be in a deteriorating financial situation, all of which become even more likely when the economy is volatile—the result: cash flow problems and more exposure to bad debt losses.

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Are Your Credit & Collection Policies Aligned with Company Goals?

Your Virtual Credit Manager

When sales and production goals are set, and then the budget formalized, scant consideration is given to the impact on credit policy. In most companies, sales are given a strong priority over the risk of slow payments and bad debts regardless of gross margins and the resources the credit and collection function can provide to mitigate risk.

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Big Company Red Flags You Can't Afford to Miss

Your Virtual Credit Manager

Monitoring and evaluating the credit risk posed by public companies and other large firms differs significantly in comparison to small and mid-sized businesses. Sighting red flags early on allows you to mitigate these risks and reduce your potential losses. Your Virtual Credit Manager is a reader-supported publication.

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Top 10 Strategies for Reducing Days Sales Outstanding (DSO)

Your Virtual Credit Manager

Your Virtual Credit Manager is a reader-supported publication. Besides driving process improvement, the experts at Your Virtual Credit Manager can apply default risk probabilities & other financial benchmarks to your AR portfolio to reveal actionable credit & collection insights.

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Eight Signs a Customer Is Becoming a Problem Debtor

Your Virtual Credit Manager

Incidentally, the higher your gross margin, the more latitude you have in extending credit to marginally risky accounts. Any subsequent collection expenses and bad debt write-offs are more easily recouped through additional sales than if your gross margins are low. Do you need help with your credit policies and procedures?