Picture of the productCredit Management: Principles and Practices
Credit Management: Principles and Practices is recognized as one of the most useful books to help develop credit management skills-both in the classroom and in the office. By using results drawn from the current survey-based research about credit managers, the book identifies essential tasks for those seeking initial employment or job advancement in the credit field. The key changes that are shaping the profession can be useful as focal points for the development of credit personnel.

The fourth edition incorporates several key financial tools that can be applied to business credit, including financial ratios, interest rate calculations, cash flow analysis, Best Possible DSO and more. Comprising 12 chapters, the book explores the most pertinent aspects of credit management. Each chapter offers specific learning objectives, a recap of important concepts, review/discussion questions, a "test your knowledge" section, recommended readings and useful links to credit-related websites. CMPP is an essential resource for all who are interested in the business credit profession.

Author Dr. Charles Gahala, CCE, CICP, is a professor of finance at Benedictine University where he specializes in the areas of corporate finance and business credit management. Dr. Gahala earned his BS, MBA and EdD degrees each from the College of Business at Northern Illinois University and has been employed in credit management at General Electric Corporation and National Can Corporation. He also has been an instructor for NACM Midwest and has served as both vice-president and president of Delta Pi Epsilon, the business education honors society. Dr. Gahala is an active member of the Association of Credit Executives (ACE) and NACM Midwest.

Table of Contents

Ch. 1: The Changing Nature of Credit Management
Ch. 2: Organizing the Credit Function
Ch. 3: Credit Management in a Global Marketplace
Ch. 4: Managing Credit Policy
Ch. 5: Legislation and Regulations Pertinent To Business Credit Decision Making
Ch. 6: Conducting the Credit Investigation
Ch. 7: Business Credit Reporting
Ch. 8: A Systematic Approach to Effective Collection Activity
Ch. 9: Financial Statement Analysis
Ch. 10: Cash Flow Analysis and Valuation Essentials
Ch. 11: Secured Credit Arrangements and Letters Of Credit
Ch. 12: Bankruptcy and Reorganization

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Picture of the productCredit: Beyond the Numbers
In Credit: Beyond the Numbers Lucas Gomez, CCE pursues a seemingly modest goal: to approach credit decision-making not as a unidirectional flow chart but as a multi-tiered function that recognizes the full breadth of the risk/reward process. His call-to-action is based on a professional career that spanned more than 30 years and provided him with many opportunities to extend credit under challenging and unusual circumstances. It was precisely those experiences that inspired Gomez's efforts to reframe the credit decision-making process. Gomez suggests that financial statement analysis, long the foundation on which credit decisions have been made, be enriched with several other fundamental elements including vital information specific to each customer and analyses of market conditions and related economic factors.

Writing in the introduction, Gomez notes, "Credit decisions are the outcome of an extensive process that requires the involvement of many players, where relationships and active communications inside and outside a company play fundamental roles. It is a process where Credit cannot function disconnected and must perform its multi-dimensional role as closely as possible to perfection." Deftly combining the basics of credit with real-world commentary, Gomez engages fellow credit professionals in a timely and useful conversation about their chosen field.

The book is divided into four parts that move readers through an overview of credit and its professional requirements; its efforts to work with other functional groups and the customer; specific responsibilities, including financial analysis, international credit management, and managing marginal accounts and workouts; and challenges that are redefining the profession, notably insourcing and outsourcing.

Though too often distilled to a numbers-only basis, the credit profession has found in Lucas Gomez a highly ethical and unwavering advocate who is re-envisioning the status quo, finding more efficient ways to fulfill the objectives of credit, and emphasizing the human-driven efforts to forge customer and business relationships.

Table of Contents


Ch 1: What Is Credit?

Ch 2: Requirements of the Profession

Ch 3: Building Strong Relationships within the Company

Ch 4: The Customer-Building Lasting Business Partnerships

Ch 5: Credit Roles and Responsibilities

Ch 6: Credit Reviews (Financial Analysis)

Ch 7: International Credit Management

Ch 8: Managing Marginal Accounts and Complex Business Opportunities

Ch 9: Workouts

Ch 10: Challenges

Ch 11: Insourcing And Outsourcing: Redefining the Role of Credit

Ch 12: Conclusion


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Picture of the productGet P.A.I.D. - A Guide to Getting Paid Faster
The Get P.A.I.D. System is four easy steps for the reader to apply to his or her business to get paid faster. "Easy credit is often used as a tool to get or keep a customer. Ironically, such policies often have the opposite effect. Using easy credit as a marketing tool can increase marketing costs and reduce margins. In addition, collection procedures for late payments put you and your customer in an adversarial role."

This is a book about getting paid faster and collecting what is due to you.

Bob Bernstein, a nationally recognized lawyer and specialist in collection and creditors' rights, has seen the costly effects of easy credit. In this seminal book, he provides a solution, The Get P.A.I.D.TM System, that can transform a business by increasing profit, enhancing the relationship with the customer and reducing overall marketing costs.

The Four Pillars of Get Paid TM

- Preparation. What you do before you provide services to develop a clear understanding of the parameters of the transaction and the benefits to the customer for paying promptly or in advance.

- Assessment. Assessing the credit risk and defining the proper precautions to integrate the credit information with your credit policy.

- Implementation. Proactive, tactful engagement with the customer to ensure compliance with the understandings.

- Defense. Prompt and proactive response where the understandings are not fulfilled.

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Picture of the productMaking Sound Credit Policy Decisions
The management of trade credit is about making decisions; decisions about how much credit investigation should be performed, who should get credit, how much credit should be granted, and so forth. Credit decision-making can be divided two parts: credit analysis and credit policy-making. Credit analysis is frontline decision-making: decisions about credit investigation, credit-granting, and collection that are made regarding individual customers. This book covers the second part by presenting the principles inherent in advantageous credit policy, centering on the benefits and costs associated with various credit policy decisions.

This book is primarily intended for people who make trade credit policy for business firms and for people who perform credit analysis and frontline decisions regarding customers.

Included with this text is a USB drive containing all the numerical tables from the chapters, cases, and appendices as Microsoft Excel files. These tables can be customized to help with decision-making in many circumstances.

Table of Contents


How to Use the Disk

Chapter 1. Trade Credit Management and the Goals of the Firm
The Goals of the Firm and Their Implementation
Implementing the Value Maximization Goal
Problems Inherent in a Classical Organizational Strategy
Dealing with Goal Conflict in Credit Departments
Implications for Credit Policy
Effects of Credit Policy Decisions
Principles for Analyzing Credit Policy Decisions
The Income Statement Approach to Analyzing Credit Policy Effects
The Present Value Approach to Analyzing Credit Policy Effects
Summary of Policy Implications in this Chapter
Case for Discussion and Analysis
Suggestions for Analysis

Chapter 2. Credit Investigation Policy
Introduction to the Trade-offs in Credit Investigation Policy
A Conceptual Model of the Credit Investigation Process
The Effects of Exposure on Credit Investigation Policy
The Effects of Profitability on Credit Investigation Policy
Next-Decision Analysis
Summary of the Policy Implications in this Chapter
Case for Discussion and Analysis
Suggestions for Analysis

Chapter 3. Credit Granting Decisions
The Traditional Approach to Credit-Granting Decisions
Overall Tradeoffs in Credit-Granting from a Profitability Standpoint: Credit Standards
Making Credit Decisions on Individual Accounts: A Present Value Approach
Parameter Estimation for the Present Value Approach
Sensitivity Analysis of Parameter Estimates
Issues in Credit-Granting Decisions
Summary of the Policy Implications in this Chapter
Case for Discussion and Analysis
Suggestions for Analysis
Appendix to Chapter 3
An Expected Present Value Model of Credit-Granting With a Cash Discount

Chapter 4. Negotiating the Conditions of Credit-Granting
What Credit Enhancements Do
Valuing Credit Enhancements
Negotiating Credit Terms
Summary of Policy Implications in this Chapter
Case for Discussion and Analysis
Suggestions for Analysis

Chapter 5. Credit Limits
Distinctions Among Credit Limits
Credit Limits and Credit Investigation
Credit Limits and Other Risks
Interactions Between Information and Risk Credit Limits
Summary of the Policy Implications in this Chapter
Case for Discussion and Analysis
Suggestions for Analysis

Chapter 6. Expert and Statistical Scoring Systems
Advantages of Expert and Statistical Scoring Systems
Principles of Expert Systems for Credit Decisions
Developing a Statistical Scoring System
Using Public-Domain and Commercial Statistical Scoring Models
Summary of the Policy Implications in this Chapter
Case for Discussion and Analysis
Suggestions for Analysis

Chapter 7. Terms of Sale and Collection Policy
Legal Aspects of Terms of Sale Policy
Evaluating Terms of Sale Changes
Terms with EDI and Electronic Payments
Cash Discounts and Creditworthiness
Collection Policy
Summary of the Policy Implications in this Chapter
Case for Discussion and Analysis
Suggestions for Analysis

Chapter 8. Monitoring Credit Performance
Principles of Monitoring Credit Performance
Measuring Discount Expense
Measuring Collection Rates: DSO
Measuring Bad Debt Expense
Comparing Performance to Budgets
Variance Analysis of Accounts Receivable Balances
Summary of the Policy Implications in this Chapter
Case for Discussion and Analysis
Suggestions for Analysis

Chapter 9. Credit Strategy
Introduction to Competitive Strategy
Credit Policy When the Competitive Strategy is Differentiation
Credit Policy When the Competitive Strategy is Cost Leadership
Outsourcing Credit Functions
Credit Strategies for Smaller Firms
Summary of the Policy Implications in this Chapter
Case for Discussion and Analysis
Suggestions for Analysis

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