Essential Standard 5.00. Understand business credit and risk management. Objective 5.01. Understand credit management. Topics. Main types of credit Common advantages and disadvantages of businesses using credit Cost of credit Main factors examined for granting credit Credit documents
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Understand business credit and risk management.
Understand credit management
Charge account is a contract between creditors and debtors. Charge accounts allow debtors (customers) to receive goods or services from suppliers (creditor) and pay for them at a later date.
Credit cards allow debtors (customers) to receive goods and services from suppliers (creditor) using credit cards and pay for them later.
I = P x R x T
The Three C’s of Credit:
Statement of account
Credit Card Accountability, Responsibility, and Disclosure Act is an amendment to the Truth in Lending Act. The act institutes fair and transparent practices of providing credit.
Some practices are instituted by the CARD Act are:
Available in the forms of