Credit Manager
Credit management is the process of granting credit, setting the terms on which it is granted, recovering this credit when it is due, and ensuring compliance with company credit policy, among other credit related functions. The goal within a bank or company, in controlling credit, is to improve revenues and profit by facilitating sales and reducing financial risks. A credit manager is a person employed by an organization to manage the credit department and make decisions concerning credit limits, acceptable levels of risk, terms of payment and enforcement actions with their customers. This function is often combined with Accounts Receivable and Collections into one department of a company. The role of credit manager is variable in its scope and Credit Managers are responsible for: *Controlling bad debt exposure and expenses, through the direct management of credit terms on the company's ledgers. *Maintaining strong cash flows through efficient collections. The efficiency of cas ...
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Days Sales Outstanding
In accountancy, days sales outstanding (also called DSO and days receivables) is a calculation used by a company to estimate the size of their outstanding accounts receivable. It measures this size not in units of currency, but in average sales days. Typically, days sales outstanding is calculated monthly. Generally speaking, higher DSO ratio can indicate a customer base with credit problems and/or a company that is deficient in its collections activity. A low ratio may indicate the firm's credit policy is too rigorous, which may be hampering sales. Days sales outstanding is often misinterpreted as "the average number of days to fully collect payment after making a sale". The formula for this would be Σ. This calculation is sometimes called "True DSO". Instead, days sales outstanding is better interpreted as the "days worth of (average) sales that you currently have outstanding". Accordingly, days sales outstanding can be expressed as the following financial ratio: :DSO rat ...