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What Are The 5 C's Of Credit ?馃挜// Techniques Used For Determining Creditworthiness Of Customers - YouTube
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[Music]
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is
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when retailers want to expand the credit
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to their customers
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they are essentially willing to provide
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the customer credit equal to the
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amount of their purchase the guidelines
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2p followed
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by 30 tillers is uh inclusive of the
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fifth cs or credit
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one of the most well-known formulas to
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determine credit for things is the five
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cs of credit which
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are as follows
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foreign
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judgment to help determine if an
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applicant seems willing to honor their
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debt
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trade reference payment record and a
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clean legal history in the business
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credit report
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help illustrate character otherwise
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character is subjective and
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many used to consider it the most
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important scene before credit decisions
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were automated the credit professor
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placed a strong emphasis on the
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applicant's character and
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the professional clear relationship
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between the customer and the
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credit manager if they knew their
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customers business well they
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would be more willing to work with that
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customer account
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in times of slow payments a customers
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that does not return phone calls
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or emails may paint of having their
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invoice sent to collections which can
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hurt the business's chances for future
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credit requests
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payment records and
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decisions
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what is the business financial capacity
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to pay its invoices
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does it have sufficient cash flow is it
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heavily settled with debt
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business credit application typically
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asked the applicant to supply bank
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references trade references
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and financial statements these documents
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will reveal the applicant capacity to
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pay
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if an applicant can't provide financial
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or references
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credit managers will need to find other
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ways to assess the company capacity to
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pay many
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trade references and financial
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capital capital describe the financial
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and non-financial asset
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that of business hold as well the amount
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of money the business owner have
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invested
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in their company if the financial assets
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listed in the financial statement
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demonstrate
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growth such as earning instead of
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renting a vehicle fleet that may imply a
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lower risk of
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non-payment of course having a financial
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statements makes it easier for a credit
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manager
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to as a credit seekers capital strength
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some industries are more capital
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intensive than
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other and this is fair the
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non-financial assets including real
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estate inventory machinery and other
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equipment
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can be helpful in determining credit
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worthiness those
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industries that require major investment
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in inventory and equipment may seem
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riskier
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than those that operate with lower
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overhead
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but this is where the credit manager
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expertise comes into play the
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knowledge
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non-financial
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foreign
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applicants with a questionable credit
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history may be asked to put up
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collateral to secure their
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tapped application for eye line of
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credit same as any or other type of law
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here the inventory machinery
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and other equipment noted under capital
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as
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assets can be used as collateral while
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collateral
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offsets lenders list it's important to
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remember comfort rather
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work out a payment plan
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to look at the big picture and consider
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economic condition within the
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applicant industry its competition and
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its
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geographic location to name a few for
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example two companies
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of the same industry and the same size
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each seek
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a line of credit but one is located in a
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city
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with living demand and the other is
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located in
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a smaller market and has been losing
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customers to
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the competition for years the thriving
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company seems
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low risk but the other one may have
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growth potential if it has recently
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changed
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its business strategy to account for the
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competition
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impact stepping back and considering
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macro level conditions
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and opportunities for growth enables
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credit
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foreign
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