CREDIT CONTROL IN THE OIL AND GAS INDUSTRY. MDPI Oil & Gas Training. content. Introduction. Credit driven industry Oil trading companies (OTCs)-90 days credit Bulk distribution companies (BDCs) 45 days credit. Oil marketing companies(OMCs) 21-30 days credit.
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The credit policy of a firm provides the framework to determine:
- withholding goods,
- not processing orders,
- interest charges and in some cases,
- legal action.
The sources of information may be internal such as the historical payment pattern of customers, or
may be external such as :
Analysis of credit information
profitability of the customer.
ensuring all credit transactions are documented and signed
In spite of having an efficient credit management strategy, it is still possible to incur bad debts.
All businesses will have some percentage of customers who delay payments or even avoid them.
Some strategies of dealing with delinquent customers include:
time span between a firm's disbursing and collecting cash.
= Inventory conversion period + Receivables conversion period – Payables conversion