Credit Risk Management : A Guide to Sound Business Decisions

credit risk management : a guide to sound business decisions

Credit Risk Management : A Guide to Sound Business Decisions

Editorial Reviews
Book Description
How to decide when to say "yes" to a credit applicant-without jeopardizing your reputation or your company's bottom line Deciding whether a credit applicant is ultimately creditworthy involves more than just poring over their financial statements-it takes the kind of advice only an experienced credit expert, like Hal Schaeffer, can give. A 28-year veteran of the credit screening process, Schaeffer outlines the nuts-and-bolts of assessing a credit applicant's financial health and ability to make good on a line of credit. In part one's clear, four-part "A, B, C, D" format (A is for Analysis, B is for Building Essential Business Credit Information, C is for Considering All Factors,and D is for Decision), the author examines a prospective borrower from every angle, using formulas, checklists of what to look for, and available outside information sources (from Dun & Bradstreet to the Internet) to get a genuine picture of an applicant's current finances and degree of credit risk. Also outlined are the financial, credit, and business factors that go into a "sound business credit decision" a guideline for consolidating facts to vindicate your decision, as well as a series of twelve chapter-length case studies (contained in part two). Discussion includes:
* Determining the cost and accuracy of financial information
* Isolating information gaps in financial records
* The actual costs (including total/partial loss of sale, insurance fees) and value (including future sales to the customer) to your company if credit is extended
* The exact nature of the sale-large (or small); one-time deal or continuous; the expected profit margin
* The controls your company has over the customer
Complete with twelve chapter-length real-world case studies of problems typically encountered (with detailed solutions), Credit Risk Management offers practical, no-nonsense advice on how to minimize the risks-and maximize the benefits-to you and your company when you finally say "yes" to an applicant.

From the Inside Flap
Requiring the skills of a diplomat, the insight of a psychologist, and the bottomline realism of a CEO, a credit professional has the unenviable task of judging an applicant's ability to fulfill a credit obligation. The art of determining which prospects are good credit risks is also a nuts-and-bolts financial discipline involving techniques for gathering credit information and assuring its accuracy as well as analyzing and making sense of all the data-ending with a final "yes" or "no." Developed from courses taught at the American Management Association, one of the nation's leading educational organizations, by a 28-year veteran of credit risk assessment, Credit Risk Management is a detailed examination of the entire process of determining the creditworthiness of a prospective borrower and outlines exactly how credit assessments are made. Equal parts realistic analysis and cautionary advice, part one is arranged in an "A, B, C, D" format ("A is for Analysis," "B is for Building Essential Business Credit Information," "C is for Considering All Factors," and "D is for Decision"); while part two is composed of twelve chapter-length real-world case studies, each illustrating (with solutions) commonly encountered problems. The book offers detailed, step-by-step guidance, using a variety of analytical approaches, for helping you assess an applicant's financial status and degree of credit risk:

Techniques for obtaining financial data, while controlling the cost of acquiring it
Common-size analysis-for comparing firms of different sizes to see how successful they are
Trend analysis-for comparing financial statements from the present year to previous years
How to calculate ratios for inventory turnover, accounts payable turnover, gross profit margin, return on investment
Key sources of current business and credit information-including Dun & Bradstreet, Experian, Graydon America, the Internet
Determining the cost-effectiveness of information

Also provided is a checklist of financial, credit, and business factors to consider when forming a "sound business credit decision" (including size of the sale, profit margin on sale, your company's level of control over the customer, and other possible costs and value to the company if credit is extended). The book arms you with anticipated best/worst case scenarios (including successfully dealing with customer counteroffers), ways of isolating information gaps, and a guideline for consolidating facts to vindicate your decision. And once you've arrived at a credit decision that is high in value and cost-effective, the book shows you how to eliminate any loopholes in your recommendation to management that might lead to rejection. The only resource a credit professional needs to perform a detailed analysis of a credit applicant, Credit Risk Management offers detailed, practical, real-world guidance on making a decision that will benefit your company's bottom line-and financial future.

Credit Risk Management : A Guide to Sound Business Decisions

Credit Risk Management : A Guide to Sound Business Decisions,H. A. Jr. Schaeffer,Wiley,0471350206,Accounting - Managerial,Accounting In Specific Industries,Banks & Banking,Business & Economics,Business / Economics / Finance,Business/Economics,Case studies,Credit,Insurance - Risk Assessment & Management,Management,Marketing - General,Risk management,Business & Economics / Accounting / Management,Credit & credit institutions,Risk assessment & analysis for business,Sales & marketing

Hot Books:

Hot Books

Recommended Books