CHAPTER 4: CREDIT MANAGEMENT
Google Earth is a wonderful tool: enter the consumer or company address and Google Earth can show the street level and a picture of the residence or company facility. (Just be aware that pictures may not be current.) Why is this important? If the given address is not valid, Google Earth may reveal a deserted building or an empty lot. The online White/Yellow Pages, using the reverse phone look-up, will validate whose name the phone numbers are registered under.
The following tools allow the information received from the customer to be and also provide another avenue to gain more information than the customer provides:
Trade magazines/newspapers { Wall Street Journal { The European Financial Review { FinanceAsia { CFO Magazine (publishes industry DPOs) { Forbes Google name (will reference other articles, like local newspapers)
You should read these reference materials on a regular basis. You can learn information about new and existing customers and their stock prices as well as economic trends that could affect your customers and your company. By keeping up with industry trends in B2B, you might foresee cash flow improvements or delays. Over the years, the oil industry has provided a good example. What industries do oil prices affect? Be cognizant of the company’s industry and the type of customers they rely on as well.
4.9 Financial Statement Analysis
Financial statements can be manually reviewed or automation can be employed. For example, after an analyst gathers the past three to five of financial statements for a company under review, he or she then creates credit insights by “spreading” the financial statements. This can be done by manually entering each line item into an Excel spreadsheet, but the process can also be automated with specialized credit spreading software, greatly increasing both speed and accuracy. The spreading of financials is used to normalize year-to-year comparisons.
Analysis of the financial information is a very important tool for the credit manager. There are several key reports used in determining financial stability.
For a business:
Balance Sheet. This describes or lists the resources of a company, including assets (items owned), liabilities (obligations owed), and owners’ equity, prepared at a specific point in time. Total assets must equal total liabilities added to owner’s equity.
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THE ACCOUNTS RECEIVABLE SPECIALIST CERTIFICATION PROGRAM E-TEXTBOOK
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