Credit management and credit risk When talking about credit management, we must mention credit risk, so that we can understand the purpose and functions of credit management, as well as the management techniques and methods derived from it.

Credit risk is a type of risk, which specifically refers to the risk that exists in credit transactions, that is, the risk of customers not paying when due.

There are many factors causing credit risk, including political risk, information risk, business risk, management risk, financial risk, etc.

Functions and Target Markets of Credit Management Credit management is when the party providing credit uses management methods to solve the risk problems existing in credit transactions.

The main functions of credit management include identifying risks, assessing risks, analyzing risks, and on this basis, effectively controlling risks and comprehensively handling risks in an economical and reasonable manner.

In the real market environment, due to the different entities and forms of credit transactions, the target market for credit management is divided into three parts: capital, industrial and commercial enterprises, and individual consumers.

In different target markets, the characteristics of credit risks are different, and the functions and contents of credit management are also different.

1. Short-term significance: Monitor the collection of customer accounts receivable at any time and deal with problems that arise in a timely manner.

In order to monitor customers' accounts receivable at any time, companies must maintain close contact and timely communication with customers.

In addition, when customers are unable to repay the money, they should be required to provide guarantees to reduce the risk of bad debt losses.

2. Long-term significance: Effectively improve customer quality.

Enterprises with standardized credit management will grant credit lines and credit periods that exceed the market average to enterprises with good credit status.

For customers with poor credit status, cash transactions will be made or a smaller credit limit and shorter credit period will be given.

For the latter category of customers, there is already a problem of capital turnover. When the company does not provide financing opportunities, some will slowly withdraw, while some will continue to change when they see that customers with better credit status can get a more favorable credit environment.

With its own credit status, the company will eventually have a stable and trustworthy customer base, and the company's image will be greatly improved.

For enterprises, this is an improvement of the living environment and a long-term favorable factor that promotes the development of enterprises.

With the rapid development of China's economy and the increasing number of foreign investments in China, industry competition has become increasingly fierce. In order to maintain an unbeaten position in market competition while minimizing business risks, companies' need for credit management has become increasingly urgent.

Stander Credit Management Center was established based on this demand.

The main functions of credit management include the following three aspects: credit risk management, competitor analysis, and business decision-making consultant.

The purpose of credit management: to make a trade-off between the increased profits of adopting credit policies and the costs incurred.

An important condition for business development is the credit system. However, the larger the credit sales amount and the longer the credit sales period, the higher the price the company will pay for occupying funds in accounts receivable.

The amount of money that an enterprise should collect from the purchasing unit or the unit that receives labor services for selling products, materials, providing labor services, etc.

Sales on credit can be promoted.

The opportunity cost of funds tied up in accounts receivable resulting from the loss of other investment opportunities and the possible increase in bad debt losses.

The main task of credit management is not only to reduce bad and bad debts, but also to balance profits and risks and increase return on capital.

Bad debts are not necessarily a bad thing, there are risks and rewards.

As the global economy slows down, corporate capital shortages have become a common phenomenon.

LINKED-F data from Platinum Consulting shows that credit sales, a business model that expands business by financing customers, is gradually becoming a trend.

But credit management is by no means simple risk control, but through control, transactions that could not be concluded due to excessive risk can proceed smoothly.

Credit managers are a group of people who pursue return on investment and balance risks and profits.

Overview of consumer personal credit management 1. Concepts, functions and classifications Consumer credit management is a technical means to expand credit consumption and prevent credit risks based on scientific management expertise.

The main functions of consumer credit management are: customer credit investigation, customer credit, account control, business debt collection, and the use of personal credit database to promote credit payment tools.

Risk factors vary among different forms of personal credit sales.

According to different credit transaction forms, repayment methods and different entities that issue credit, consumer credit can be divided into retail credit, cash credit and real estate credit.

Among them, retail credit can be further divided into revolving credit, installment credit and service credit.

2. Characteristics of consumer credit management There are significant differences between consumer credit management, corporate credit management and commercial bank credit management in terms of customer groups and service methods. These differences determine their differences in credit management technologies and methods.

The target customers of consumer credit management are individual consumers, while the target customers of corporate credit management and commercial bank credit management are corporate legal persons.

The characteristic of personal credit consumption is that the amount of a single transaction is small, but the number of transactions is huge.

In addition, the transaction methods in personal credit consumption are very flexible, and the amount of data required to process transaction settlement records and credit records is also quite huge.