What is credit management ?

Credit management is the process of controlling the credit extended to customers to minimize bad debt and optimize cash flow.

Credit management involves setting credit limits, assessing customer creditworthiness, monitoring outstanding balances, and following up on overdue payments. Effective credit management protects revenue and reduces financial risk.

Example: Before offering Net 60 payment terms to a new enterprise customer, the finance team reviews the company's payment history and credit score, sets a credit limit of $50,000, and establishes automatic alerts for overdue invoices.

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