Cost-Effective Credit Investigations
- Topics:
- Revenue recognition
- Tags:
- Management,
- Penton Media Inc.,
- Security,
- Strategy
- Source:
- Penton Media
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Overview: Most companies allocate substantial resources to the credit-approval process to minimize future bad-debt expenses, but they don’t always fully consider the costs of allocating those resources to credit decisions. The more credit investigation you do, the lower your bad-debt expense is going to be, because you are better able to sort out customers with high bad-debt probability from customers with low bad-debt probability. Spending more to reduce debt-default rates isn’t always worthwhile. To maximize profits, businesses must balance bad-debt risk with the many obvious and not-so-obvious costs of aggressive credit reporting.
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Format: HTML | Date: Jun 1999 | Pages: 6
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