The Dilemmas over Credit Policy Management in a Company

Maria Gorczyńska

Abstract


Purpose of the article: The paper identifies the core dilemmas over the establishment of the credit policy in a company. It considers the general scope and basic stages of credit policy management and analyses each stage of credit policy in terms of decisive aspects. The main areas of concerns are discussed within the settlement of credit policy and its implementation with regard to the model of optimal credit policy.
Scientific aim: The paper aims at constructing a unified model of issues rising dilemmas while setting and implementing the credit policy management. It also aims at identifying core decisive problems in each of these fields and at providing a structured questions framework.
Methodology/methods: The paper is based on conceptual analysis and deduction of the literature and general review of issues related to credit policy management. It containts autors’ own view on the problems included in each stage of credit policy management.
Findings: Credit policy management is a subject for numerous dilemmas. The main areas of concerns are related to: the decision about the goal of credit policy managemet with regard to its restrictiveness, the settlement of credit policy with regard to elements of credit policy, and finally the implementation with regard to the risk of bad debts occurrence.
Conclusions: (limits, implications etc) The establishment of credit policy in a company requires to balance contrary interests and thus involves wide variety of issues to be considered. The presented model of decisive problems might be applied in each company regardless to their size.

Keywords


Credit policy; trade credit; account receivable; account receivable management; optomal credit policy; cost of credit policy

JEL Classification


G32

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Online: 2013-10-21