Credit Control Management
Credit control is the system used by a business to make certain that it gives credit only to customers who are able to pay, and that customers pay on time. Credit control is part of the Financial controls that are employed by businesses particularly in manufacturing to ensure that once sales are made they are realised as cash or liquid resources.
Credit Control is a critical system of control that prevents the business from becoming illiquid due to improper and un-coordinated issuance of credit to customers or even lending in a Financial institution. Credit control has a number of sections that include – credit approval, credit limit approval, dispatch approvals and well as collection process.
In a large business a credit process will be run by a senior manager and will include processes as such as Know Your Customer(KYC), Account Opening, Approval of credit and credit limits (both in terms of the amounts and the terms e.g. 30 Days, 30 Days net), Extension of Credit and effecting collection action.