About This Chapter
Credit & Inventory Management - Chapter Summary and Learning Objectives
Explore the mechanics of how businesses set up and run their credit policies and how they track and manage inventory. The brief video lessons come with a written transcript that can help you ensure your understanding of the material. At the end of the chapter you will have covered:
- Credit policy and receivables
- Components of a credit policy
- Analyzing credit policies
- Total cost curves
- Organizing the credit function
- Granting credit
- Monitoring receivables
- Inventory systems
- Inventory management
- Credit policy analysis
|Credit Policy & Receivables||Examine the components of credit policy, cash flows, and receivables.|
|Components of Credit Policy: Terms of Sale||Study credit periods, cash discounts, and credit instruments.|
|How to Analyze a Credit Policy||Investigate the evaluation of credit policy and its effects.|
|Total Cost Curve & Organizing the Credit Function||Look at the total cost curve and how to organize the credit function.|
|Evaluating, Scoring & Granting Credit||Discover why credit should be granted or withheld.|
|Monitoring Receivables in a Collection Policy||Learn how receivables are monitored in a collection policy.|
|Perpetual and Periodic Inventory Systems||Explore the financial manager, inventory policies, and systems of recording inventories.|
|Inventory Management Techniques||Learn about the ABC approach, the economic order quantity-model, and managing derived-demand inventories.|
|Credit Policy Analysis: One-Shot & Accounts Receivables Approaches||Study the one-shot approach and the accounts receivables approach, and look at discounts and default risk.|
1. Credit Policy & Receivables
In this lesson, we will learn about credit policies and receivables. As you can imagine, having customers who can, and do, pay on time is essential to a company's success in the business world.
2. Components of Credit Policy: Terms of Sale
In this lesson, we'll define credit policy. You'll learn the three components of building a credit policy: terms of sale, credit extension and collection policy. We'll also explore the 5 Cs of credit and other credit analysis alternatives.
3. How to Analyze a Credit Policy
In business-to-business sales, customers often use credit to pay for products or services. The seller extends the credit to the buyer under certain terms and conditions. In this lesson, we will learn how to create and analyze a new credit policy.
4. Total Cost Curve & Organizing the Credit Function
How much credit can a business offer to its customers? In this lesson, we'll look at the total credit cost curve, including what it is and how it can be graphed. In addition, we'll examine how to organize the credit function of a business.
5. Evaluating, Scoring & Granting Credit
Offering credit can help bring in new customers. But how does a company know how much credit to extend? In this lesson, we'll look at how to evaluate customers to determine how much credit to grant.
6. Monitoring Receivables in a Collection Policy
Any company that offers credit to customers needs a collection policy. In this lesson, we'll examine what a collection policy is and how to monitor receivables to make sure that your business is collecting all the money owed.
7. Perpetual and Periodic Inventory Systems
Inventory management is an important part of business success. In this lesson, we will discuss the two types of inventory systems used in accounting today.
8. Inventory Management Techniques
How does a company know how much inventory to keep on hand? In this lesson, we'll examine inventory management and discuss three major approaches: the ABC approach, the economic order quantity model, and derived-demand inventory.
9. Credit Policy Analysis: One-Shot & Accounts Receivables Approaches
Companies that offer credit to their customers take on the risk that borrowers will default. How can a company know if offering credit is a good investment? In this lesson, we'll examine two approaches to answering that question.
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Other chapters within the Finance 101: Principles of Finance course
- Introduction to Corporate Finance
- Financial Statements, Taxes & Cash Flow
- Financial Statement Basics
- Long-Term Financial Planning & Growth
- Introduction to Valuation Methods
- Discounted Cash Flow Valuation
- Interest Rates & Bond Valuation
- Stock Valuation
- Net Present Value & Investment Basics
- Capital Investment Decisions
- Accounting Risk & Return
- Return, Risk, & the Security Market Line
- Options & Corporate Finance
- Cost of Capital
- Financial Leverage & Capital Structure
- Dividends & Dividend Policy
- Short-Term Financing & Planning
- Cash & Liquidity Management
- International Corporate Finance
- Studying for Finance 101