Business Credit Principles

About the Program

This intensive program offers a comprehensive look at the credit function. Upon successful completion, you should understand the role of credit in financial management, the components of effective credit department systems and procedures, specific government regulations that pertain to business credit, credit and policy procedures, selling terms, negotiable instruments, the Uniform Commercial Code, credit investigations, financing and insurance, business credit fraud, factors associated with credit limits, out-of-court settlements, and bankruptcy.

General Information

Program Schedule

Day One

I. Financial Overview

Credit in the Business World

• Discussion of the role of commercial credit in today’s society for the financing of goods and services.
• Discussion of the role of the Federal Reserve in expansion and contraction of the flow of funds.
• Legal aspects of the Consumer Protection Act and its effect on Consumer and Commercial Credit.
• Anti-Trust legislation.

Lunch Break

Credit Policy

• Defining credit policy in relationship to company goals and objectives.
• Discussion of factors affecting credit policy.
• Establishment of company credit policy and procedures.
• Implementation of credit policy throughout the company.

Understanding Negotiable Instruments

• Elements of negotiable instruments.
• Understanding use of notes and drafts.
• Legal implications of a negotiable instrument.

Day Two

II. The Credit Decision-Development

Decision Procedures

• What is a marginal account?
• Factors affecting the development of terms of sale.
• Understanding the three areas of terms.
• Uniform Commercial Code and its effect on terms of sale.
• Benefits of proper terms of sale on company.
• Use of guarantees and letters of credit.
• What is a bank line of credit, factoring, ordinary accounts receivable financing?

Lunch Break

Legal Forms of Business

• Thorough study of legal forms of business structures—benefits and disadvantages of each.
• How should the credit grantor react to each form of business entity when establishing credit availability amounts?

Comprehensive Review and Mid-term Exam
This review and mid-term exam will cover the material presented in class on Tuesday and Wednesday.

Day Three

III. The Credit Decision - Investigation

• Understanding the 5 C’s of Credit.
• Rethinking the credit application.
• Direct credit investigation.
• Indirect credit investigation.

IV. The Credit Decision - Financial Statements: Understanding
Fundamentals of Financial Analysis

• Auditor’s opinion statements.
• What is a balance sheet?
• What is an income statement?
• What is a statement of cash flows?
• Understanding financial ratios.
• Case Analysis—Utilizing all of the credit decision tools.
• Establishing the credit availability amount.

Lunch in the Expo Hall

Day Four

IV. The Credit Decision - Financial Statements: Understanding Fundamentals of Financial Analysis – continued

Lunch in the Expo Hall

V. Collection Procedures

Defining Collections

• Reviewing ongoing accounts.
• What is collection procedure? When does it begin?
• Collection policy.
• Use of invoice and statements in the collection process.
• How to deal with an overdue account at various stages of delinquency.
• Dealing with out-of-court settlements.
• Is it a bad debt?

Bankruptcy Code Proceeding

• What is a Chapter 13 Bankruptcy?
• What is a Chapter 11 Bankruptcy?
• What is a Chapter 7 Bankruptcy?
• How do we react to each?

Management Reports

• What reports are key and important?
• Who reads the reports?
• Understanding and interpreting reports to management.
• Are they necessary?

Day Five

Comprehensive Review and Final Exam

In order to give you sufficient time to take the final exam, we strongly recommend that your return flight be scheduled to depart after 5:00pm on the final day of the program or the following morning.

*Schedule is subject to change.