Schedule

In modern conditions credit risks are considered to be one of the most significant financial risks, and their management is becoming increasingly popular from the point of view of both theory and practice. In spite of the fact that nowadays credit institutions have powerful tools of risk management, automation and strict system of external control, credit risk management is of special interest, as it threatens creditor with financial losses and even bankruptcy. Therefore, it is necessary to check the creditworthiness of the borrowers and require sureties or collaterals to secure the repayment of credit funds when granting loans. However, borrowers are not always able to provide sufficient guarantees to secure credit transactions, and creditors to take the risk of non-repayment or non-payment of interest by debtors and to form a system of counteraction to credit risks and their consequences. Therefore, with the development of credit relations and the formation of a competitive environment in various spheres of the economy, the role of the system of preventive measures to protect credit transactions increases. This determines the relevance of considering the issues of credit risk assessment in the organization.  

If you have problems with your counterparties, it is best to first try to negotiate the repayment or restructuring of the debt on terms acceptable to both parties. If it is impossible to reach an amicable agreement for some reason, there are only options to try to collect debts in court, or sell them to collectors (usually at a discount). To start the procedure of collecting, at least it is necessary to constantly monitor the terms of payment under the contracts, and in a timely manner to identify which of them requires action to be taken to review or to recover. Overdue accounts receivable, for which the creditor does not take action to collect, may become uncollectible in two cases: After the statute of limitations has expired; On the basis of an act of a state body about the impossibility of collection, or liquidation or bankruptcy of the debtor company. In this case, the creditor will be forced to write off such bad debt as a loss, which will have a negative impact on its balance sheet.

Sales mistakes happen not only to novice managers, but also to those who have been in the field for years. The question is whether these mistakes are systematic or one-offs. With the second category everything is clear: people are not robots. It is worse when the errors are permanent in nature. In this case, you need to work through them with the manager and see how much information has been absorbed.

Uncollectible receivables represent direct losses. Overdue accounts receivable impede the turnover of assets, force to take measures to recover them and spend additional funds (lawyers' services, legal costs, etc.). To ensure normal solvency of the enterprise an effective system of receivables management is necessary. It is a complex of measures aimed at solving the main problem: preventing bad debts. Its solution presupposes realization of both exacting and preventive measures.