In short, credit policy is a system of measures and rules aimed at implementing control over the implementation and use of loans provided by a company or bank. The company's credit policy, among other things, may include a system of rules for building relationships with customers, which includes the debt collection procedure. Let's see how credit policy will help us in working with debtors.

Your credit policy may be written in a lengthy document with detailed instructions, or it may be as short as one page. Much depends on the corporate culture of your company.

But in any case, the credit policy should include:

• thoughtful work with the client: rules for segmenting types of customers and rules for working with each segment;
• distribution within the company of work related to interaction with debtors;
• internal debt collection procedure;
• a description of situations in which a debt is transferred to a collection agency for collection;
• a description of situations in which a debtor is sued.

This system must be recorded on paper. It is clear that every company and every person has some internal feelings, based on which they decide whether they can lend to a given person or company or not. The question is whether these feelings are only internal or whether they are written down and understood by all employees of the company in the same way, whether there are clear instructions for each of the company’s employees and for every possible situation.

The following are the benefits of a clearly defined credit policy.

• You understand who does what, that is, there is a distribution of powers and responsibilities.
• All employees understand when and in what situations work is carried out according to one or another approved plan, that is, there are established action algorithms.
• Other employees understand the rules just as you do. The debtor will not be able to take advantage of the contradictions within your company.
• Written acts communicated to the public eliminate the grounds for conflicts caused by misunderstandings of management's actions. No one has any questions related to ethical behavior, problems with customers and between employees are minimized.
• The rules for working with customers, that is, to whom and under what conditions goods or services can be provided without advance payment or with partial advance payment, must be understood equally by everyone, and this requires that they be written down somewhere.
• Thanks to a well-thought-out policy, financial costs are reduced and time wasted.
• By presenting clear requirements for the professionalism of employees, the credit policy stimulates and supports the need for staff training.
• Finally, such a document answers most routine questions. With its help, a new employee will get up to speed much faster. You don’t need some kind of guru who answers what to do in a given situation.

Consider your company's credit policy. Any of your actions should be aimed at business development.

Thoughtful work with the Client

Segmentation

In order to figure out what to do in relation to different types of customers (which were discussed in the section "Fascinating debtology"), information about them needs to be organized. Conduct segmentation based on the data that you know about your Clients.

Remember that simplifying is difficult, complicating is easy. Make sure that your system reflects the specifics of your business and is as simple and understandable as possible even to a layman.

Table 2. Example of grouping customers according to their degree of financial stability

High sales Low risk A+	High sales Medium risk B+	High sales High risk C+
Average sales Low risk A	Average sales Average risk B	Average sales High risk C
Small sales Low risk A-	Small sales Medium risk B-	Small sales High risk C-

For each group, special work plans for debt collection should be developed in advance, using the usual tools: letters, calls, meetings, plus (as a last resort) contacting lawyers and the court. These plans should not differ fundamentally. But nevertheless, for each of the groups it is necessary to think through its own procedure, which would take into account differences in relation to the duration of the debt, the degree of influence in the business and the customer’s background (we allow a longer delay for stable and proven customers and a shorter delay for new, risky ones).

For example, for companies from the group of high sales and low risk, if they have delayed payment, it is better not to write standard letters, but to immediately call and ask what happened, and offer to meet. Something must have happened to them if they broke tradition and didn't pay!

Companies with high risks and high volumes of orders can only supply goods and services on an advance payment basis, for example, above eighty percent of the delivery cost.

The size of the loan (a loan also means the transfer of goods for sale, sale with deferred or installment payment, etc.) should not in itself be a criterion for making a decision to tighten or soften the approach in our debt collection system, or a reason for transferring the debt for collection to a collection agency .

For example, your total debt may be in the hundreds of thousands or millions, but it may also consist of many smaller debts amounting to a few dollars.

Of course, you need to take into account the total amount of debt, the number and amount of individual accounts (debts), as well as their repayment schedule. But main criterion To assess the prospects for debt collection, time must be taken - the duration of the debt.

The approved system for distributing customers into groups should not be stable. Depending on the current situation, they need to be differentiated and transferred from group to group. If the new customer has confirmed his commitment and increased the volume of supplies, he should be transferred from a medium-risk group to a more privileged one. At the same time, a stable buyer with a positive payment history may suddenly encounter problems in the market and become more risky.

Attentive attitude towards each Client and an attempt to understand the motives of his actions is an effective tool for collecting payments.

Differentiated approach

In relation to customers, you can solve two different problems.

One of them is minimizing the number of non-payments and lending costs. What is needed here is firmness, perseverance and consistency in achieving the goal.

The slogan of this approach, which we will call aggressive, is “money at any cost.”

The second task is to promote sales, which implies a softer approach to the customer, respect for his self-esteem, and correctness. Streamlining the sales process develops more correct relationships with the buyer and improves the quality of service. All this can become a stimulus for the emergence of special ideas, a certain “trick” of the organization that will distinguish its working methods from the methods of competitors and contribute to a positive attitude of customers towards it.

The slogan of this approach (we will call it liberal) is “to save the customer at any cost.”

Choose which goal is your priority: reducing debt or increasing sales. These are different goals, requiring different strategies. Something will have to be sacrificed.

Since it is important to strike a balance between these two polar approaches, different methods should be used depending on the type of customers, order situation, etc. Obviously, we are more liberal with larger customers than with risky ones; in a situation where the number of orders is decreasing, we are less demanding, and when the workload is high, we are tough.

For example, if you have many debtors, this is reflected in the cost of your product, since losses associated with optional payers have to be included in the price for all customers, including mandatory ones. Reducing lending costs thanks to well-structured work will help reduce the cost of goods and services. And lower prices than competitors are an important component of sales!

Remember that when dealing with debtors, your goal is not only to repay debts, but also not to lose customers.

Mindfulness and activity

Do not allow the terms of your work to be discussed only verbally, and the contract to be an empty formality. If, after concluding the main contract, it becomes necessary to perform any work or deliveries in excess of the norm established in it, be sure to enter into an additional agreement. It should indicate the terms and conditions of payments, etc.

Without proof of the existence of the debt, it will be very difficult for you to collect it. You must have a contract, a letter of guarantee, a signed paper, a message sent by email or fax, an audio recording of a conversation, or an independent witness who agrees to confirm that you had an agreement that one of the parties did not fulfill.

You definitely need some kind of documentary evidence of the debt. Otherwise, your position is very (very, very) weak.

Please note that harsh actions on your part, such as suspension of supplies, damage to reputation and boycott by other suppliers, may lead to further deterioration of the debtor's financial condition or to bankruptcy. Therefore, the application of economic sanctions should be based on knowledge of the reasons why the debtor does not pay. And if he is a large enough customer, then it may be better to earn a little less from him today in order to receive additional income in the future.

The main method in working with debtors, which is also used to minimize “difficult” debts, should be welcome letters to new customers, which indicate your terms of payment. In addition, you should always confirm the buyer's order while reminding them of the payment terms.

Some companies that didn't pay their invoice on time might actually just forget about it. On the other hand, there are those who manipulate accounts and experience cash flow problems. They pay the bills of only the most demanding creditors, plugging urgent holes, or pay the bills of some customers by obtaining loans or prepayments from others.

Act quickly and decisively, diversified and consistent. If you let a payment go unnoticed that is more than 90 days past due, the debtor will rightly assume that you are not taking their debt very seriously.

Not leaving debt unattended and reminding about it often and regularly is the key to success.

Reminding the debtor about you as soon as the problem arises, taking other steps - all this will help move your invoices to the top of their list of upcoming payments. Remember: a debtor is not a problem, he is a job. What I mean is that you need to work hand in hand with the debtor. Change your attitude towards him if this is not the case yet.

Subsequence

People strive to be consistent - this is our psychology. Consistency is socially approved and considered prudent. Our parents teach us this from childhood: “Do it once you start!”, “Bring what you started to the end,” “Said A, speak and b" And so on.

In most cases this is reasonable, and everyday experience confirms this.

Take into account this stereotype of human thinking. Maintain a self-image as a consistent and prudent person who understands perfectly that after receiving the goods payment is made.

As already mentioned, ask the debtor to sign an undertaking to pay the debt.

But you can act more subtly. Surely there are some reference dates in your financial relationship with the customer. If they are not there, find them. This is easy to do if your relationship with the customer is stable and cyclical.

For example, every month you deliver goods to him, and every month he delays payment by different periods. What can become a starting point here? Agree on a traditional Special Day (which in your internal classification is listed as “bill payment day”); let it be, for example, the 13th or the first Wednesday of every month. Take part in the ritual. Make it a rule to visit such a customer, have lunch with him, bring some reports for the past period, etc. Let this become a tradition for both of you.

How does this tradition work to your advantage? The fact is that this ritual has another side - what the customer must do by this date: complete all the paperwork, that is, pay and draw up all the documents. Remind in advance and congratulate the customer in a friendly manner on your common day. If you strictly follow this rule, showing consistency, the client will also strive to look like a consistent person performing his part of the ritual.

Establish a tradition of paying bills. Enter a Special Day in your relationship with the customer.

Organize your debtor database in the easiest way. Let those who are 30 days late with their payment be placed in the next action sequence and receive a specially prepared payment reminder letter on the 31st day. On the 60th day, they are also quickly transferred to the next, 60-day group and receive a second letter, call, or offer of a meeting. As soon as the payment has gone through, the customer is removed from this database.

Perhaps the easiest way is to automate, if possible, all stages of account control.

If the debtor owes a large amount and circumstances are such that he cannot pay at the moment, ask him to pay a small part. After a while - the next one, and so on. It is important to support the beginning of this journey so that the debtor gets into the rhythm of repaying the debt and takes it into account in his expenses.

Perhaps this will be a solution for both of you. This method is called "salami".

But! This doesn't work with scammers. Quite the opposite. If the debtor has paid even the minimum amount, in court it will be very difficult to prove the debtor’s malicious intent: after all, he started paying! By 2108 the debt will be repaid. His great-great-grandchildren will pay off yours... In this case, do not allow the fraudster to repay the debt in parts, demand the entire amount be returned at once.

Try to distinguish a fraudster from an honest person at least at the correspondence stage, if you were unable to immediately recognize him. Convince an honest person to start paying even small amounts.

Discounts are better than fines!

Perhaps the practice of providing some discount for prompt payment - on time or earlier - will be very beneficial for the sales department. This practice is widespread in some industries and is called early bird discount.

In this case, you still maintain a profitable deal and encourage customers to independently monitor payment deadlines and strive to make them as early as possible.

If the buyer does not pay on time, let him pay the “regular” price. On the day when payment was to be made under the contract, an invoice is issued for the full, pre-agreed amount.

For example, you say that the regular price for a certain service is $120, but those who pay before March 26 will receive a $20 discount. Your ad has a cheerful message: “Save $20!” But let's face it. Are we talking about a real discount? No. This is a very mild form of issuing penalties for those who do not pay bills within a timeframe that suits you, for example, before March 26th. But this is perceived as a real discount.

Incentivize early payments with discounts.

If payment is made after the specified date, then the “price without discount” means for you a premium (or call it a penalty) for late payment. Inform the customer that if he misses a payment, the discounts offered upon purchase will not apply. He needs to either pay on time and get a discount, or part with a larger amount.

In other words, by doing this, you can collect penalties without calling them that word.

Perhaps you shouldn’t act so straightforwardly and make discounts. There are many other ways. Offer special terms of cooperation, additional services or nice gifts to the most important and valuable customers.

Give your best customers, such as dealers, a special status (gold, platinum company partner, etc.). Let your other partners know why certain companies are included in such a privileged group, what privileges they receive for their status, and see a clear program of actions that will allow them to be in this group.

Sometimes rewards work better than punitive measures. Offer a barrel of honey, not a fly in the ointment.

Our world is inhabited by different people. Among them there are thrifty people who keep track of their finances. And there are others. I'm talking about those who don't go to sales or collect coupons to get a free sixth cup of coffee after drinking five. About those who buy clothes from new collections of their favorite brand and do not know where the stock center is located. About those who leave generous tips in a restaurant rather than cook at home, who prefer to pay fines without haggling, but not slow down on the highway.

These people earn enough to pay for the kind of life that suits them.

Offer them a new service that they can buy - a deferred payment service.

Inform, for example, that payment no later than the 15th of each month is a common practice at the company. But since there are people who find it more convenient to pay bills later than the specified deadline, this is also possible, and your customers have the right to use this kind of credit line - for a fee.

Will this state of affairs seem like a punishment to your partner? It’s unlikely, it’s just an additional service. But nevertheless, I am again talking about the fine. About the penalties. About sanctions against rule violators. Change your attitude towards customers. Include a clause in the contract not about sanctions, but about the cost of an additional service. Let customers evaluate for themselves whether they want to buy it. And if they don't want to, they will pay on time.

Think of penalties for failing to meet financial obligations as a service you provide by delaying payment. Paid service.

However, there is an unexpected twist here.

Do you charge penalties? How often do you do this? If you did not submit an invoice for the late fees, you also violated the contract. Why did you then include this point in it?

Set a deadline for when an invoice can be paid before turning it over to third parties (lawyers, collection agency) for collection. Never do not change this deadline and inform the customer how long you still intend to wait and what will happen after that. Let both parties know the exact date when the unpaid invoice will be turned over to a collection agency or incorruptible collection service. In general, keep a list of what you can do to harm a presumptuous debtor. Having such a list will give you confidence.

Involving third parties in the collection process increases your chances of recovering bad debts.

If you charge penalties and they have not yet been paid, you increase the amount owed. And then the debtor sees your consistency and begins to take the agreement more seriously. In addition, when the penalties are finally paid, you will receive additional profit.

If the customer is more important to you than the money he uses, simply do not include clauses on penalties in the contract.

Be consistent and fulfill the agreement strictly. Even if we are talking about issuing a fine. Strive to collect penalties or do not charge them at all, remove any mention of them from the contract.

Do you want to make a transaction, although the conditions are different from usual? The new company insists that payment will be made two weeks after the goods are shipped. You convince yourself and management that you really need this customer, especially now...

Let's say your business has a 10 percent profit margin. By selling $10,000, you hope to make $1,000. If you encounter an unscrupulous payer who will not pay this money, then in order to compensate for the losses, you will have to sell an additional $100,000. Sometimes it is worth refusing an unreliable buyer in order not to work ten times more later just to compensate for the losses .

It is sometimes difficult to calculate penalties for each day of delay. Introduce a system where penalties are calculated not per day of delay, but as a fixed amount for each week, including incomplete ones. Let's say you find some leisurely company. The accountant prepared the invoice, but the manager did not sign it on time. Since the day has passed and new penalties have been accrued under the agreement, the accountant will have to re-prepare the invoice, etc. In such a situation, it is easier to calculate penalties once a week.

And one more important nuance: you should not sell anything on credit to lawyers. For the old legal joke says: “Ignorance of the law is no excuse from the law. Knowledge of the law frees you from responsibility.”

Credit policy for large companies

Let me give you my favorite example of this. I am an event organizer. Often large companies (customers) tell small ones (agencies, performers) something like this: “We are very big. It is prestigious to work with us. You can be proud to add our company to your list of customers. Do this work on our terms, and, perhaps (!), in the future you will receive much larger orders from us on more acceptable terms.”

I don't really trust such hints. Life shows that this is just a trick of large companies; they are not going to draw any conclusions from a one-time cooperation. If they don't want to pay normal rates and terms, they will never start doing so.

Perhaps, only very young companies that are willing to work virtually for free just to gain a name and experience should agree to such arguments. If you already have experience, and even more so if you have to give up other projects in order to work with such a large company, it is better not to even consider such applications. Otherwise it will turn out like in the old fairy tale: the beaten one is lucky.

I already told this story in the book Great Events. A large company was preparing to hold an important press conference. We honestly won the tender, offering optimal quality at a reasonable price. Having received the contract for approval, we found out an interesting detail: all expenses for preparing the event are borne by the agency, the customer pays them two months after receiving all supporting documents. Thus, it turns out that a small agency for free lends money to one of the world's largest companies for several months. In addition, services already provided cannot be returned. And the customer company, by the way, will be very tempted to find fault with minor omissions during the execution of the work and, on this basis, achieve significant discounts after the fact or not pay at all. Having invested money in their event, the performer will be glad to receive at least something later and will most likely agree to any discounts. Will the customer be able to resist such temptation?

Sounds a lot like a hostage situation, right?

At that time, we brought to the attention of potential Clients that we do not work under such conditions and we need an advance payment at least to cover the direct costs of the event. The company responded that they were not happy with this. The collaboration didn’t work out, which I don’t regret at all.

To avoid getting into a similar situation, count everything down to the smallest detail, issuing an invoice that actually reflects your costs. Including the cost of borrowing and potential lost opportunities associated with a reduction in your company's working capital.

Do not lend to your customers, especially if they are larger than you.

Note! If you are really dealing with some market monster that has a huge turnover, and you are afraid that you will not get paid, your fears may be justified. You may be hesitant to sue, and unfortunately, doing so would be a smart decision. Large companies have significant legal staff, influential business partners, experience and other resources. It will be very difficult for you to confront such a machine in court. Your counterparties also understand this and feel completely protected, aware of their own power.

Reminders

It seems that the result of the company's ideal credit policy would be a complete absence of debt. Sometimes this is true, but more often than not it is not entirely true.

A good example here is my home Internet provider. His problem with debtors was solved very simply. As soon as I run out of money in my account, the Internet stops working. They simply disconnect me without sending a single warning. And this despite the fact that I, pay special attention to this, have been their customer for a year and a half and connected at the most expensive tariff.

Since their support service, like other services, works from 11:00 to 17:00, and I work from 9:00 to 19:00, it is not possible to resolve the issue of payment promptly and I have to wait for the weekend (fortunately, they work on Saturday) to receive a receipt, pay and bring it to their office (they do not accept fax). After this, the Internet is turned on for 20 minutes.

But this company has no debtors, I’m sure.

Is this credit policy good? Yes, it clearly gives instructions to the user on what is and is not allowed. Guided by it, it is easy to figure out what and how to do, but, unfortunately, it does not leave the opportunity to agree and change something. She also effectively solves the problem of debts. Although... why don't they send me reminders? The company loses a few days of my traffic every couple of months between the time it goes out and the next Saturday when I can reach them. You can say it more directly, in other words: They Lose Money. But I could also pay late fees. But I am not given this opportunity.

I would venture to assume that the company does not know who their best Clients are, and if they knew, I would not be one of them: after all, once every couple of months, that is, regularly, I miss a payment. And although in this case this is due to their work schedule, they are unlikely to be pleased with such an explanation...

I would change them, but the trouble is that the second provider working in my area does exactly the same thing. I believe that the credit policy of my service provider is based on such draconian methods because this is generally the approach to customer service in the company. In addition, the payment amounts are relatively small, and the company considered it inappropriate to administer the possible debt. If your company has gone through a similar stage of development, strive to ensure that the credit policy does not suppress effective demand, but helps it bloom and be realized in your services.

Not all people and companies like to be reminded about due dates. They grumble and say: “It’s not time yet, don’t interfere with work.”

Nevertheless, such a reminder is one of the measures to protect your money. Write into the contract as a service the possibility of reminding about the due date of payment. Don't bother the customer, but help him. Let him thank you for your excellent service. In addition, he will note that in working with him there is an individual approach, that someone is working with him very attentive.

Let payment reminders become an additional service for your customer.

A debtor is not only a debtor

Debtor as your business partner

Remember, chances are you are not the only person in your company who has a relationship with the customer. Perhaps he is already somehow connected with management, the sales department, accounting... Your negotiations may be more or less successful depending on how these relationships have developed. Maybe at the moment the customer is making what you think is an insignificant purchase, but in general he is a major buyer in another category of goods or services.

Or vice versa: debts often arise from previously unresolved conflicts that may not be related to the case at all. An unresolved conflict or resentment may result in the customer’s unwillingness to fulfill his obligations. Moreover, your side may be objectively to blame for the conflict. In other words, violation of your company's obligations can be used by your partner as a reason for violation of obligations on their part.

Try to pay attention in advance to situations that may cause conflict and resolve them. Most often, we are simply too lazy to find out what is going on. Make sure that conflicts do not lead to breaches of obligations.

Remember that the customer may have other relationships with your company. It's better to find out about them in advance.

What if a customer who has paid well and been obliging in the past suddenly refuses to pay and asks for a replacement item or redo work? For example, the amount in dispute is $5000. It’s clear that you don’t want to lose this money. But still, first of all, evaluate how right he is in his claims. Perhaps the truth really is not on your side and it was your employees who were not up to par. In this case, demanding payment would indeed be short-sighted. What if the customer is really right? Assess what will happen if you, having received this payment, lose the customer. Perhaps your relationship has been building for years and could continue. If you insist on your position, you will lose both your business partner and all future profits, which could be many times greater than the amount of loss. In this case, it is better to give in and simply monitor more closely the fulfillment of obligations to this customer in the future.

Fuss around an accountant

Other relationships can be established by you. For example, with accountants. Do you love your clients' accountants as much as I love them? This is a powerful force! A lot depends on them.

Do you know the name of your main buyer's accountant? What are your ten biggest buyers? Do you know their favorite flowers or professional holidays (like the annual report holiday)?

Most likely no.

Get to know these people urgently. Usually they are not spoiled by the attention of anyone from the outside, except for the manufacturers of accounting programs and legal information systems (they call almost daily). Accountants are valued internally but are little noticed by outside companies such as suppliers.

But they don’t notice them until a problem arises. And if you meet a person at this critical time, it will be difficult for you to convince him that you are good and that you have been working with their company for a long time. Initially, the accountant will be determined to protect his company from the attacks of people like you. He will see you as an aggressor. Think about it, because then he will be able to find fault with your documents, demand them to be redone, lose the account, not send a payment, etc.

Don't wait for conflict as a reason to get to know each other. Most likely, your clients' accountants are very nice people. They are engaged in intellectual work, do not have to sell you anything (due to official duties, in any case), and for this reason they are completely sincere in their judgments. Therefore, after concluding an agreement, ask which employee of this department you will do business with, introduce yourself to them. This will be greatly appreciated as it will indicate to the accounting department that you understand their importance. And they will immediately know that the contract has been concluded. Unfortunately, often the accounting department learns about the need to pay the invoice only after all the deadlines have already passed.

Your relationship with the customer's accountant can be surprisingly tender and romantic - after all, in fact, you personally do not owe each other anything. Other people agreed on supplies: the sales service of your company and the purchasing service of your business partner’s company. Therefore, your sincere attention to the accountant, small signs of attention will be considered as sincere, pure love. In contrast to such signs of attention to the purchasing department or, in general, to those on whom the purchasing decision depends.

Why do you need all this complexity? Yes, because although the decision to purchase is made by the executive director, but when exactly this purchase will be paid for entirely depends on the chief accountant or financial director. And they may have a different opinion about the need for this supply at the moment, about the opportunities for the development of the company, and besides, they have in their hands more recent data on the flow of cash in the account.

In other words, they can know that some purchase was rushed for a month or two. And it is they who will delay payment all this month... So it turns out that these people have quite a tangible influence on your business, even if you sell microcircuits.

Don't forget that an accountant is your agent of influence within the client company. He has direct access to the accounts.

Often the accounting department independently decides how quickly and in what order to pay bills. Therefore, your reputation in the eyes of the customer’s financial workers must be impeccable. Make an effort and win this position.

On the other hand, in many ways an accountant is a performer, that is, he does what management entrusts to him. But nevertheless, in financial matters he is a very, very influential figure within the company. His opinion will be listened to, so it is important that at the right moment he says about you: “I think this company needs to be paid quickly, if you don’t mind. There is no longer any reason to delay."

Sales and credit

The ultimate goal of a business is to make a profit. And profit arises as a result of the sale (sale) of goods and services. Therefore, they devote a lot of time and effort to training sales employees. Many books and trainings are devoted to how to get the customer to say “yes” and take your product or use your service. It seems that the essence of selling lies only in this: to persuade the customer. But is this really the most important thing? After all, the fact of sale becomes such only when the customer’s money is in your account. Preferably on time.

If you work in a store and sell televisions on credit, you have a special reason to worry that the buyer will not pay. Actually, your money is only the difference between the price you paid to the supplier and the price at which you sold the TV, that is, your profit. If the customer does not pay, you will lose both your profit and the money you have already paid to the supplier. Your position in business will be significantly complicated: after all, you will lose part of your working capital and will not be able to satisfy the needs of other, more obligatory customers.

If you make televisions or produce oil, non-payments from traders or end-customers also prevent your business from growing. However, you still have a chance, as a last resort, to return your product and sell it to someone else.

But if you provide services, you are in a special situation. Since the service is intangible (more precisely, does not involve a transfer of ownership), you will not be able to return your work once it is done.

As W. Churchill said, what matters is not so much whether you can overcome the difficulties of life's path, but rather that, having overcome these difficulties, you can continue moving in the same direction. In our case, this means that debt itself is not a terrible thing. We all constantly find ourselves in a state of debt, take out loans, negotiate deferred payments. There is nothing wrong. The important thing is that by mutual agreement with the seller you will pay a little later, both parties know about this and are happy with it. Problems arise when the debt is not repaid on time. In the future, we will call such a situation an overdue debt, receivables, etc. There is no concept of a normal level of debt or a normal amount of “bad” debt: everything depends on the market, the specifics of the activity, and many other factors. But there are the most general guidelines, and they are as follows:

• if you have a business with a low rate of added value relative to the cost of goods, for example, trade or production, then the level of “bad” debts should not exceed 0.5-2 percent of turnover;
• if you have a business with a relatively high rate of added value, for example, services, consulting, then the level of “bad” debts can reach 20 percent of turnover.

If the amount of “bad” loans in a bank’s loan portfolio exceeds 20 percent, it is considered that such a bank is already in the risk zone. Check what the situation is in your company. If your readings are high, you may also be in danger.

Why does overdue debt occur and what causes it?

Control the level and quality of your Clients’ debts, do not let other people’s loans threaten your business.

Early diagnosis of your internal problems

Debt often arises in situations where the organization does not have a system for monitoring the receipt of funds for concluded transactions. There are cases when products are shipped without knowing whether an advance has been received from the customer. So Lack of information sharing in your company may contribute to debt.

The fact that sometimes you yourself are responsible for the debts that arise is very difficult to realize, and even more difficult to admit such a thing, but it is absolutely necessary to do so.

For example, you can create debt by simply invoicing your customers late. Let's say you completed some work for which an advance payment was made. However, later the customer required additional services, etc. You did everything, but the invoice was not issued immediately and not even after a week, but, for example, after a month. During this time, the customer could already report for the completion of a certain project, sum up the results and therefore did not count on additional costs. And now you have an additional psychologically difficult procedure: to receive confirmation that some additional work was performed, but their cost was not included in the paid invoice, etc. Although all that was needed was to issue an invoice without unnecessary delay.

Your attentiveness and your decisions at this stage can determine the entire further course of events. Agree that it is better not to have debtors at all than to then valiantly collect what is due from them. But if something terrible happens and you have an unplanned debtor, you should recognize the situation and the degree of its danger as early as possible. The sooner you determine which collection methods are best suited for each specific case and apply adequate collection methods, the greater your chances of success. You must act quickly and decisively. Otherwise, losses are inevitable.

Treatment and prevention approach

Working with a debtor is similar to preventing, diagnosing and treating a disease. Prevention is most important: it is better if there is no disease at all. And then progressively: if the disease is detected at an early stage, it is easier to cure; conversely, an advanced form leaves little chance of success.

It's the same with debts. To avoid excruciating pain later, you should treat them with extreme care, carefully and immediately respond to any problem that arises.

It is vital to identify potentially problematic debts. The sooner you do this, the greater your chances of successful collection.

What is the difference between an ordinary person and a professional? The fact that a professional sees things that are not obvious. When you look at an x-ray, you see cloudy black spots on a dark gray background. And a professional sees, for example, a slight displacement of the fibula associated with the consequences of an old fracture. It’s the same in business: learn to see signs of potential problems before the problems themselves manifest themselves.

Red flags your sales team might notice first

By being on the front lines interacting with Customers, Sales can see and learn more about them than anyone else in your office. These are your eyes and ears, and keep them wide open. These people can be the first to notice even the weakest signals of an approaching buyer crisis. A timely reaction: moving the customer to another risk group, appropriate changes in the bill payment procedure, for example, switching to prepayment, can save you from the emergence of problem debts.

Table 3. Signs of problems in the Client’s business

Alert	What does it mean
Reducing the volume of orders from the customer	They will soon have no money
Your customer's main customer (service consumer) is experiencing difficulties	They will soon have no money
Loss of key employees by the customer	Employees will move to a competitor and take customers with them. The customer will soon have no money
Empty shelves in a customer's warehouse or sales area	They have nothing to maintain liquidity, or they are closing altogether
The customer’s company operates in an area noticeably smaller than what is available	Their rents are too high. This means they have less profit and less ability to pay your company. They may have recently cut production
The customer's company operates in an office that is noticeably larger than what employees need	The company has made layoffs or moved to a new office and will soon hire new employees. Expansion also means that the company is now at risk
You are no longer allowed into the customer's production premises	There's something wrong there. Maybe everyone was fired and production was closed
The company could not decide on the terms of the contract, was stalling for time and did not explain the reason for the delay. Then one day she started to hurry up and rush you	The company wants to achieve favorable conditions for itself, taking advantage of the turmoil and haste, hopes to include conditions unfavorable for you in the contract, etc. Still be very attentive to details and follow all formalities

You may have other signals, your own, that indicate that something is wrong in the customer's company. Write down in the instructions what your sellers should pay attention to. Create your own unique instructions that meet the specifics of your industry.

If a customer speaks poorly of a competitor you respect, call the competitor and directly ask what's wrong. It's possible (very possible) that your new Client simply owes them money. And therefore, hiding from them, this time I turned to you... If this is so, then the honor of being next is very doubtful. Money up front - or there will be no deal.

Call your competitor and ask why your new Client left them. Perhaps he already owes them money.

Or maybe so. You are going to the airport. You don't just go - you rush there, late for the plane. Or rather, you want to go to the airport, but... The dinner with an important customer has been delayed, it’s raining outside, and, as luck would have it, there are no taxis available. You are in a desperate situation! Finally, a nice yellow car stops next to you, and the driver agrees to take you to the airport. Everything is fine, but the price he asks is too high: he wants twice as much as you usually paid for such a trip... The driver is an excellent psychologist, he understands that you have no choice and the losses from being late will be much higher than the cost of his too expensive services...

If you see that the buyer easily agrees to harsh terms, try making them a little tougher and see how he reacts. If he is indignant and bargains, everything is fine.

People agree to the most unfavorable conditions when they are in a hopeless situation, in a desperate situation. Yes, now you can make ropes out of them. But the risk will be great. Perhaps your debtor will not get out of this situation.

Talk to him. How desperate is his situation? Find out what's the matter, why he definitely needs this contract. Perhaps now, more than ever, your customer needs help, which will pay off handsomely later. Perhaps you will refuse the contract so as not to aggravate the situation of the debtor.

If you are interested in long-term cooperation, do not try to make money at such a moment, because then the customer will never become your friend and loyal customer.

If the debtor agrees to any tightening of the terms, then he is in a desperate situation and it’s time to talk to him frankly.

When is it better not to give credit or deliver goods without advance payment?

This should not be done in several cases, namely:

Having repaid the loan, the business partner immediately or almost immediately asks for a new, larger one. Perhaps he has to borrow to repay the debt, and the number of creditors loyal to him is decreasing, since he began to contact you so often;

the contract has not been signed, and there are no other written guarantees from the buyer that he will pay by the agreed date;

your interlocutor is doing too well, everything is just perfect. Or his eyes shift, he speaks softly and insinuatingly, but not to the point. You just can’t grasp the idea that he seems to want to convey to you;

you know or see that the potential customer is inconsistent in his own life: he often changed jobs, got divorced several times, is irresponsible... His behavior should lead you to think that he may also change his mind about paying you;

the customer looks noticeably richer or poorer (clothing, behavior) than he should according to the completed questionnaire or the data provided. Or a transaction with a seemingly large company is concluded in a cafe, restaurant and other similar places, and not in the Client’s office. All this means is that your new partner may not be who they say they are;

you don’t understand something about the buyer, you notice some of his strange actions, unusual behavior and don’t see any rational reasons for this. Better ask him for an explanation. Most likely, he will be happy to tell you what and how. But maybe the person is simply confused and his behavior is driven by despair. Or perhaps the meaning of his actions is that he is not going to pay you;

you know or see that the buyer is overwhelmed by passions (this may include gambling, having an all-consuming hobby, etc.). There is a serious chance that your money will be used to pay for these hobbies rather than what you agreed on;

you have a clear feeling that the person you are interested in is capable of theft and dishonest acts. If possible, do not communicate with people who are unpleasant to you. Intuition lets us down much less often than it helps us out.

What may indicate that the debtor is capable of creating problems for you?

We are talking about a situation where the goods were supplied on credit, the debt has already arisen, but:

• payment deadlines were missed by the debtor without explanation;
• the buyer has disappeared. After the sale, you cannot reach him or contact him in any other way;
• the debtor denies his responsibility, denies the fact of receiving the goods or services;
• he complains about a low-quality product or service. Moreover, these complaints are constant and (or) unfounded. This behavior means that the debtor does not want to pay and is looking for any opportunity to do so.

The reasons for the above may be that the buyer is not going to pay or that he cannot pay and wants to escape. And this means that you are dealing with a willful defaulter or fraudster, that is, a representative of the type of debtor who accounts for up to 50 percent of bad debt write-offs.

How to deal with this?

First of all, you need to understand who you are dealing with, and it is better if you understand this before your goods or services are sold. If you do make a mistake, you can reduce your losses by immediately contacting a collection agency or court. I want to repeat: in this case, the usual collection procedures should “collapse”, reduced to one strong-willed decision: a declaration of war on the debtor.

The stomach guards financial interests

Listen to your stomach. Although its main function is digestion, it has another, no less important purpose: the stomach was conceived by nature, including as an alarm organ. And in this capacity it works great. Listen. Every time you are offered an excellent opportunity, some unique project, you feel a treacherous chill in the pit of your stomach, and you understand: the offer is somehow too good, like cheese in a mousetrap. Or you see a man with shifty eyes, hear his sweet speeches and understand that he reminds you of an escaped oligarch, that such a person will lie and not blink an eye. And not only do you not want to go on reconnaissance with him, but you wouldn’t even want to stay alone in an empty office. But the voice of reason forces the stomach not to interfere in strategic decision-making. Of course, who will admit that they listened to the voice of the stomach (or intuition) and that is why they refused a tempting offer that would improve the department’s performance.

Maybe you're right and this time you shouldn't listen to your stomach. Once, my stomach and I disagreed: he said that we would not be paid, but we were paid... Once. (Then we were talking about a couple of thousand dollars. The dollar millionaire, the owner of the largest company on the market, personally promised to pay.)

When making a decision, focus not only on objective data, but also on subjective feelings. Trust yourself. Who said that intuition interferes with your work?

Here, as an illustration, I would like to give my favorite example from the film “Ronin”, which had a strong impact on me at one time. In this film, Robert De Niro played a very experienced special operations specialist, a CIA agent. His hero and his colleagues bought weapons from illegal dealers. The parties met in a deserted place, the seller counted the money and offered to pick up bags with weapons not far from the meeting place - under the bridge.

De Niro's character said: "I'm not going, let them come here." Why? “If the situation is doubtful, there can be no doubt,” he explained. And indeed, there was a trap under the bridge. If the agent had gone, both he and his partners would have died. But they survived - and all because the proposal seemed a little dubious...

The same with customers. If some little thing, some detail you didn’t like and made you doubt, most likely you are right to doubt and the buying company has some fundamental problems that it is hiding.

If a representative of a company that commands your respect looks like a scoundrel, it means that the company has some problems with hiring staff. It is also very likely that this person is not pretending to be who he is. Or you have misconceptions about the integrity of the company.

Actions to prevent non-payments

From the very beginning, you must create such a situation for the customer, enter into such agreements with him in which violation of the terms of the contract would become unprofitable for him.

As auxiliary means of securing obligations it is worth mentioning:

• penalty, that is, fine, penalty;
• pledge;
• surety;
• bank guarantee;
• insurance;
• retention of the debtor's property;
• other methods provided by law.

In case of violation of contractual obligations in writing Let the customer know about the problem and what you will do about it. Such actions may include changes to the contract, the application of penalties, or their gradual increase. In other words, you must take the initiative, change the agreements in your favor, and shift the losses onto the shoulders of the customer. You, of course, have a moral right to do this: after all, they did not fulfill the agreement on payment terms!

Your goal is to convince the customer that violating obligations is extremely unprofitable for him.

The principle of scarcity

In the sunniest tone and with concern in your voice, tell the debtor that you are doing very well and have a lot of clients. And since the quantity of goods is limited, from January 1 it will be supplied only to those customers who have no current debt. The same principle works in the service sector. Unlike goods, services do not have a physical volume and are not limited by space. But they have other restrictions, for example, on time (hours of work of staff and equipment), number of seats, hotel rooms, etc. And you can report that there is a queue, a waiting list and customers without debt enjoy priority service.

Frankly speaking, you simply inform the customer in the least painful way about the introduction of restrictions or even the cessation of supplies. But! You do not break off relations with him, you leave the opportunity to continue working. What is in short supply is desired especially strongly. Moreover, you talk about the need to repay the debt in such a gentle form. The customer himself, realizing that he may lose you, offers to compensate all your costs and pay for the product (service). You may even be promoted to higher account priority rankings as a result.

Make your products and services a little less accessible to the customer. Let him really want them.

If, after the buyer violates the terms of the contract, you proceed to the next stage of work without receiving money from him, because you intend to further develop your relationship with him, you are sending a signal to your business partner that the terms of working with you may be more lenient. This behavior will encourage the customer to revise the terms of the agreement to make them more and more profitable for themselves. This is a bad method.

If non-payments arise, demand more serious guarantees to continue cooperation. You can read more about this in the chapter "Ways to Ensure Debt Repayment"(chapter ).

Development of a collection procedure

One of the most important provisions of credit policy should be collection procedure, describing your actions directly aimed at repaying the debt.

Here's roughly what it should look like in practice if the buyer doesn't pay on time:

on the day you should have received payment, write an email stating that the payment was not received;
• on the third day - call and remind personally (you will read how to do this correctly in the chapter "Telephone conversations" section “Tactics of interaction with clients”);
• on the fifth day - call, remind, ask for an explanation;
• on the tenth day - write a written complaint according to template No. 1 (soft, but decisive); the template is given in the Appendix to this book;
• on the twelfth day - call and find out how the claim is progressing;
• on the twentieth day - write a written complaint using template No. 2 (more stringent);
• and so on until going to court.

Use the CCL principle in your work ( which means “call-call-letter” - “call-call-letter”). Its essence lies in the fact that you very persistently and consistently repeat what you are owed.

In the future, we will call this action and all others that are part of the enterprise’s credit policy collection procedure.

Remember that when dealing with debtors, the most important factor is time. Try to take it into account in your collection procedure. Let any step in working with the debtor be tied to the due date of the debt.

Please note: accounts that are less than two months overdue typically have a greater than 80 percent chance of being paid under internal collection (that is, collecting the debt in-house).

What to do in the first two months after debt arises:

• concentrate all internal efforts during this period, while the effectiveness of your collection work is the highest;
• start intensive work with debtors: contact them frequently during these two months;
• constantly increase pressure on the debtor as the 60-day deadline approaches.

  Tools:

• copies of invoices and letters of guarantee;
• suspension of supplies;
• reminder letters;
• letters of claim;
• reminders and telephone conversations;
• negotiations in personal meetings.

Invoices more than three months overdue typically have less than a 50 percent chance of payment under internal collection. And over time, the likelihood of collection gradually decreases.

What to do after two to three months of late payment:

• continue the collection procedure on your own;
• write off the account;
• use the services of specialists by contacting a collection agency;
• file a lawsuit yourself;
• use the services of a lawyer and file a lawsuit.

After delaying payment for two to three months, there is no particular hope for a positive result. In this case, it is better to agree to the customer’s offer to pay at least part of the invoice amount (or initiate this offer yourself) and stop arguing.

Tools:

• sale of collateral;
• claim correspondence;
• lawsuits.

Don't forget: time = money. And in your case in the most literal sense of the word.

The price of debt

Calculating the cost of debt

You may have different approaches to estimating how much a debtor is costing you. It all depends on the type of activity you are engaged in, your ability to increase the debtor’s account and... your ambitions. Here are some ways to estimate the cost of debt for you as a lender.

0. Not at all. You simply don't consider how much debt costs. You only care about the fact of collection, and then only as long as the debtor has the money. After payment, you are no longer interested in it.

1. Symbolically. In the contract templates that you started using two years ago, there was some clause about fines, and something like 0.1 percent was mentioned there. But you have never issued penalties in the form of an invoice to customers. This clause of the contract was always just for beauty.

2. According to the inflation rate. One hundred rubles at the beginning of the year and at the end are not quite the same in terms of purchasing power. Some things get cheaper, some things get more expensive, but they usually get more expensive. Inflation is the minimum that the debtor costs you.

3. By the level of deposit rates. If you put money in a bank account while the payment was late, you would probably earn something. Why should you lose this income simply because the money is lying dead in your customer's account?

4. By the level of lending rates. If the customer borrowed money from the bank to pay your bill, they would pay that rate, right?

Perhaps you yourself (your company) have already taken out a loan for business development and are now indirectly transferring it to your customer. Is it correct that your customer uses the goods or services produced thanks to this loan (that is, actually uses it), and only you will pay the interest? Obviously not.

5. For lost profits. The profit generated by your company must be higher than the rate of return on deposits or the level of lending rates. Simply because if this were not the case, the company would be worth selling and the proceeds put into circulation by lending to more profitable companies. If your company is not being sold now, then everything is probably fine and its profitability is higher than the loan rate.

Ask your accountant what return you are making on a $100 investment and calculate the annual rate of return on capital invested in your company. This rate can be used to calculate the cost of debt for you.

By the way, this is the most correct calculation, but it is still inaccurate, since an economically fair percentage should take into account the additional profit from increasing market share through trading on credit and much more.

Don't forget: instead of the customer's business, you could develop your own.

Let's pretend that:

• if your company’s turnover is $1 million per year, all your debts are repaid, not a single debt will have to be written off, that is, all debts are 100% reliable;
• you have a 20 percent profitability level;
• on average, the delay in payment is about 12 working days;
• With 240 working days per year, the delay is about 5 percent. Thus, you credit customers for the amount of overdue accounts receivable, that is, $50,000 per year. Let's assume that the cost of using the loan is 15 percent of its amount. This will be $7500.
This is the notional cost of maintaining this level of receivables.

Your debt collection costs

In addition to indirect losses like inflation, etc. you also have direct debt collection costs that should also be taken into account. Let's take a closer look at them.

Salaries of personnel involved in collection procedures. Any work must be paid. Including debt collection work. Calls, visits, written letters cost some money: after all, those who do this are paid a salary. Salary costs must be strictly taken into account, since when repaying small debts, this expense item can be the most significant. It is most convenient to keep records by working hours spent. More on this below.

Telephone bills. These are direct collection costs. They are especially noticeable if customers are located in different cities and you receive monthly bills for long-distance calls.

In addition, if you have a lot of customers, perhaps the best solution would be to enter into an agreement with some call center, whose operators will call your debtors. In this case, call center agents' per-minute billing will also be included in your collection costs.

Postage. These are also direct collection costs. You pay for postal correspondence, courier delivery of documents, duplicate invoices to replace lost ones, invoices, etc. With a large volume of correspondence, invoices for this type of expense can be significant.

Computers, software. To work with debtors, you may need additional technical assistance. For example, if you have a lot of debtors that you need to call, you can buy a call center operator station and associated software, which will cost you several thousand dollars.

If you are planning to open a collection agency, you may need professional software designed specifically for working with debtors. Investments can amount to up to half a million dollars.

Training. Knowledge, like other assets, wears out. It is necessary to maintain a certain tone among collection service workers, to encourage them to exchange experiences and search for new ideas and opportunities. They need regular training in negotiation, sales, and psychological defense skills. Loan specialists must also know the laws governing their activities, or at least navigate them.

Collection agency commission. Depending on the condition of the debt, the agency may request as a reward from 5 to 99 percent (in the case of repurchase of a bad debt) of the total amount collected. The usual commission is 10-25 percent of the amount of the collected debt at the early stages of pre-trial resolution of the dispute and 45-50 percent at later, advanced stages.

In some cases, agency fees may be based on a relatively small fixed fee and a percentage of the debt collected.

The advantage of contacting a collection agency is that by paying the required part of the amount, you will free up your time, since you will not have to monitor the collection process. The collectors will do everything themselves and provide you with a report on the work done.

Subscription costs to credit bureaus. The cost of credit bureau services ranges from a couple of dollars to several thousand. Subscription presupposes the opportunity to use a database of credit information collected by other participants in the system or the bureau itself. You can also add information about your debtors to the database, which will make it much more difficult for them to work with other users of this system in the future.

Let's draw intermediate conclusions.

Obviously, debt is a perishable commodity. Money is rapidly depreciating, and this is influenced by two factors.

The first is your financial losses: inflation, lost profits, etc. If a conscientious debtor does not pay you on time, but pays a little later, you still lose money.

The second factor is time: the longer you wait, the less likely it is to successfully recover the debt ( rice. 1). If you cannot return the money on your own, you are forced to transfer part of the money to a collection agency (or spend on legal costs). The collector's commission is inversely proportional to the probability of collection: the lower the probability of successful collection of the debt, the higher the percentage of compensation the collection agency will request.

Rice. 1. Dependence of the probability of debt collection on the loan statute of limitations

Try not to delay in demanding payments: the later you remind the debtor of his obligations, the less likely it is to get your money back.

What should a debt collection service be like?

The job of debt collection is complex, and when you start it, you need to understand that. It is very difficult to pick up the phone and call the person who owes you money. If you don't like it, no wonder: it's not the most enjoyable activity at all. Even specialists from collection agencies who seem accustomed to everything sometimes experience psychological overload. But this is their daily routine work! Nevertheless, it is necessary to collect debts, such is life.

What kind of person is the best debt collector? There is an opinion that business owners are the best at collecting debts. That's right, because it's practically their personal money! These people have very strong motivation, they are interested in a positive result.

However, it is not only entrepreneurs who do this job effectively. It is important that the loan officer understands that every unpaid invoice is a blow, including to his well-being; in every such invoice there is a share of his salary. Then he will treat the funds and property of the company in a businesslike manner and, therefore, do his job better. He will be able to communicate on equal terms with any negotiator. He will tell the debtor without embarrassment: “I gave you money.” At the same time, the position of the person with whom your employee will talk is not important - after all, it is not he, but the director of a large enterprise who finds himself in the position of a debtor, that is, he acts as a potentially insolvent entity.

A karateka who is about to break a brick with a blow of his hand does not aim at the surface of the brick, but below. Aims as if the brick is already broken. Likewise, a debt collector must be one hundred percent sure that he will collect money from everyone he contacts. If there is no such confidence in relation to someone, it is better not to contact this debtor at all at the moment, but to concentrate on more promising ones (from the point of view of the possibility of collection) - and collect information, prepare, look for pain points of a difficult Client. You will not be able to collect debt unless you have a clear understanding of how it will be done and confidence that the chosen strategy will bring results. Prepare to win. Only to her.

It is worth noting that one of the important tasks of debt collectors is not to be swayed by first impressions. Consciously or not, but just by looking at a person, we make some kind of judgment about him. And it may be wrong. A soft and shy employee may end up being a very tough intellectual negotiator. A rude director can show himself to be both a coward and a cordial, hospitable host.

Who should be entrusted with debt collection?

If your team does not have a debt collection specialist, this function will have to be assigned to someone from the staff who also has other responsibilities. Since this is a rather unpleasant job, people will probably refuse it. And yet, who can it be entrusted to? Sales employee, lawyer, accounting representative or someone else? Each of these options has its pros and cons.

Financial workers

Accounting wisdom says: “An accountant is a person who solves your problems unknown to you in a way that is incomprehensible to you.”

Accountants and other financial workers are the first to know when a debt arises - primarily because they have access to the company's accounts. They know the size of the debt, how overdue it is and how it will distort the reporting; they truly understand what problems a particular unpaid debt will bring. Often they keep all the necessary documents. All this makes the decision to appoint a financial employee responsible for the repayment of debts as the most natural.

But! Please note that the accountant often knows absolutely nothing about the customer, relations with him, and may not even be familiar with him in absentia. Simply put, for an accountant or financial worker, each customer is just an entry in the program and a printed stack of papers. Thus, the accountant can only standardly inform and remind about the debt, without using any personal arguments.

He cannot distinguish between a demanding, fearful or arrogant customer and will treat everyone approximately the same. Accountants or financiers, of course, know almost everything about the customer, but usually these are people of a certain character who prefer to deal with numbers rather than with human psychology.

If an accountant begins to study the characteristics of each customer, he will no longer be an accountant.

Accountants will not love the debtor - they will only demand.

Lawyers

Lawyers also have their undeniable advantages. They are well versed in the agreement concluded between the parties, understand the rights and obligations of both themselves and the customer, can legally competently correspond with debtors and present them with the most justified claims. All their steps will be balanced and evidence-based.

However, due to the nature of their work, lawyers are not inclined to conduct complex negotiations related to business relations - this is not their function. To prove their qualifications and usefulness, they subconsciously strive to either sprinkle in legal terms that are incomprehensible to the customer, or, after a short correspondence of claims, go to court. Their job is not to find a compromise, but to persuade their opponent to accept their point of view and comply - through argument or after a court decision. All or nothing! Lawyers will almost certainly miss the opportunity to negotiate with the client on terms acceptable to both parties for resolving the situation. As a result, payment will be further delayed due to lengthy legal proceedings.

Again, since the lawyer gets involved in working with the debtor only when the problem already exists, an individual approach to the Client and contact with him are lost, which deprives you of possible prospects for further cooperation. As a result, the company wins the case, but loses the Client.

If you decide to involve lawyers in debt collection, remember that in this way you will most likely lose the Client.

Sales and commercial department specialists

The sales department usually has complete information about the characteristics of the customer, his preferences and values. Its employees know how the relationship with the Client developed in the past and what orders they can count on in the future. Sellers are usually well informed about their Clients, their individual characteristics, the current situation and have an idea of ​​the prospects for further work with them. They can show sensitivity, understanding when to ask and when to demand. They are more inclined to negotiate and do not seek litigation, like most other people.

However, dealing with debt is a job of delivering bad news. And the seller is the one who, in the eyes of the Client, should be associated with the best that the company has. But at the same time, this is the person who allowed the debt to arise! And can he then return the money?

By the way, it is possible that when transferring information known to sellers to other services, to other people, some valuable details may be lost. And this is quite understandable. Many sales department employees deliberately withhold information that seems valuable to them in order to protect their position in the organization. Of course, the sales department specialist holds all the threads and connections with the Client: perhaps he knows the names of his children, when is his birthday, what is his hobby, etc. This is what helps build relationships and sell better. If such a seller is fired, all ties will be severed, and it is unknown whether the new employee will be able to establish a trusting relationship with the buyer. Naturally, in this state of affairs, few people will agree to transfer important information to other people.

Remember that the seller is not always interested in collecting debts - he initially has other tasks. Don't ask him for the impossible.

Collection service

So, it turns out that none of the above specialists will be able to fully carry out the work of debt collection. Should debt collection really only be done by executives or professional debt collectors?

Let's try, no matter what, to find positive aspects in any considered option.

Financial workers are effective in preventing debts and promptly responding to their occurrence. They must immediately inform the specialist responsible for repayment of the debt about the occurrence of the debt. This is their function: prevention and early response to the emergence of a problem.

Sales department employees can and should deal with the return of those debts that are not hopeless (the debt period is less than 60 days; the company has not been declared bankrupt; the debtor has not gone on the run, etc.). In addition, in order to prevent going to court, employees must be involved in active negotiations with existing Clients, sometimes speaking on their side.

Lawyers should advise sales service specialists or the collection service on the rights and obligations of the company and customers, and possibly participate in negotiations. Lawyers work well with unscrupulous customers, fraudsters, and debtors for whom there is no longer any hope for voluntary repayment of the debt.

And now a few words about special people whose job is solely and exclusively to collect debts.

When there are quite a lot of debtors, concluding a subscription agreement with a collection agency may be a good solution (for more information, see below in the chapter “ When should you contact a collection agency?") or creating your own collection service. Such a service does not necessarily have to be a mini-analog of counterintelligence, whose employees receive fees like James Bond. One person, not young, but with experience working in the competent authorities or simply having the necessary connections, can be more useful than an entire department. He can pay more attention to debtors, without being distracted by other tasks. After all, his job is eight or more hours a day devoted exclusively to debt collection.

The benefit of assigning a special person to the role of debt collector is that he can afford to be the “bad guy”, thereby eliminating the “good guy” in the sales department or the company as a whole.

The principle of contrast

It lies in the so familiar to us from films and generally hackneyed technique of contrasting “good cop - bad cop.” However, it can be used subtly and it works. Especially if you decide to involve a specialist from the sales department in debt collection. Let’s say the debtor is in no hurry to pay even after he has communicated with the collection service, he has been presented with additional demands and we are talking about repaying the entire amount of the debt, including fines. And then a representative of the sales service appears on the stage, who previously concluded the deal (so that there is no clear connection with the above-mentioned technique, let some time pass between the presentation of sanctions and the seller’s speech). The seller, who is currently acting as a debt collector and at the same time a “good guy” (as opposed to the “bad guys” who threatened fines and almost arrest), can communicate that he has management permission to complete the transaction without application of fines (or with some reduction in the level of requirements). Realizing that this is the lesser evil, the customer can gratefully agree. In addition, the customer will experience both a feeling of guilt and gratitude towards the seller.

Use the principle of contrast. Make high demands first and then slightly softer demands.

It is possible that with the advent of a collection service in your company, internal conflicts will arise: between the specialist selling the company’s services and the accountant; accountant and credit controller. Treat this calmly and in a business-like manner. Such conflicts are not uncommon, and they can always be resolved.

How might your team be organized?

Of course, a lot depends on the specifics of your business and the structure of the company. But nevertheless, there are several basic options for distributing work and accounting for their cost.

Here the approach used by companies providing consulting and legal services can help us.

The following approach is very common in their activities: the cost of services is determined by the number of hours spent on work. If you work in manufacturing, this approach may not be common or common. But debt collection is a sphere of immaterial labor; you do not produce anything by collecting. Therefore, studying such experiences may be useful.

How can time tracking be organized? At the end of the day, have the recovery workers fill out a table like this:

At the end of the week there will be five such signs, at the end of the month - twenty, etc. And then it will be clear how much time is required for certain specific actions (for example, calls), how much time exactly this or that debtor takes.

In any organization, the workforce will have a certain hierarchy, where at the top of the pyramid there are qualified specialists with high wages, and at the bottom are the least paid workers who do not have special professional skills.

To achieve a reduction in debt collection costs, technical and mechanical work should, if possible, be delegated to a lower (cheap) level. This refers to writing and sending standard letters, maintaining a customer database and tracking their payments, reminiscent of calls, etc. Specialists, whose knowledge and labor are much more expensive, should focus on management, decision-making and participation in complex negotiations.

A company may simply find itself in a critical situation if a large number of management employees are directly involved in the collection process, for example, a director or chief accountant monitors the status of accounts, communicates directly with debtors... In my opinion, managers should be limited in such contacts, since they represent is heavy artillery, and the more often this resource is used, the less effective it becomes.

Look at how work is distributed in your company. It is irrational to spend more money on the debt collection process than you will receive from the debtor.

It is also worth noting that in this hierarchy, it is not only and not so much the cost of employee time that is important, but the distribution of powers, more precisely, the limits of decision-making or moving a problem to a higher level. For example, which of your employees has the right to agree to a deferment or installment plan, as well as to debt restructuring, what kind of debt does this concern (the size, limitation period, and other parameters that are important to you will matter here)? It is very important.

Conflict between sales department and collection service

Is the sales department in constant conflict with the financial control service? They can be understood. They feel like they are solving different problems. But it only seems...

The sales department, wringing its hands, sobs: “We find Clients! It's so difficult! We persuade them, befriend them, give them gifts, spend mental strength and paid resources of the organization. And these!.. They scare away customers, they LOSE them. They are ruining our work!”

The financial control department also seriously notes: “And they are throwing money around the market. Your sales department gives away our company and its products! Anyone can do it! The REAL purchase occurs not when the customer picks up our goods, but when he pays. We are finishing their work! We give meaning. There is nothing to regret that a few scammers no longer take our goods. Last time we didn’t ask enough in court; we needed to present more fines.”

Attention! One of the key ideas of this book!

In fact, the company's marketing policy and credit policy should be closely integrated; they can generally be a comprehensive program. Their common goal is to develop the company’s customer base and maximize profits.

Credit policy allows cut off unprofitable customers what helps concentrate on the best, the most careful and loyal customers. Concentration is the main argument of this approach; it makes it possible to provide Clients with the best service. At the same time, the goal of credit policy is not to lose customers and market share due to an overly aggressive debt collection process.

How can we unite them? The principle of “divide and conquer” does not work here: the organization loses more due to the disunity of these departments. Therefore they should regard each other as partners, colleagues, not opponents. They are two parts of one mechanism. One can propose a seemingly paradoxical scheme for their reconciliation.

So, the sales department blames the debt collectors for losing customers, and the collectors blame the salespeople for supplying products to very unreliable customers. Why is this happening? What is wrong with the existing system of relationships if departments of one enterprise do not help, but hinder each other? How should work be organized to avoid this state of affairs?

• The sales department should be paid a bonus for its effectiveness in receiving Customer payments. Not only for the number of transactions or money received at the end of the reporting period, but for money received on time. That is, to receive a premium for the “quality” of the products supplied to customers. They should be interested in receiving stable, reliable Clients, and not just any. This will make life easier for the financial control department.
• The financial control department, in turn, should receive a bonus not only for the number of successful collections, but also for maintaining a loyal attitude of Clients. Employees should be motivated to behave as politely and correctly as possible, and to try to present the company in the most favorable light.

It is worth noting separately that employees of both departments must have real tools for both assessment and influence on Clients, since bonuses can only be awarded for things that the employee can directly influence.

In order to unite the sales departments, the financial department and the financial control service in order to synchronize their work, the possibility of them receiving a bonus should be tied to the success of the partner department.

The credit manager ends the work of the sales department. It is he who makes the client a Client and helps him to become successful in this capacity. After all, the person or company who took your product becomes a Customer only when they pay. Before that, they are simply debtors.

Personal qualities of employees and life experience

When selecting a specialist for the position of debt collector, pay attention to the following points in his biography:

• whether this person was or is involved in sports. If yes, then this means that he is determined to fight, strives to achieve results and be the first;
• whether he worked in direct sales. For example, did he trade face to face. This indicates resistance to stress, the ability to conduct financial negotiations, communicate with strangers, the ability to be flexible and work in an uncertain situation;
• how persistently the person sought to meet with you. Such persistence indicates persistence in achieving the goal in general.

When you have already found an employee, do not forget that the person who comes to the new place is initially full of enthusiasm. Having seen how other workers cope with their responsibilities, the newcomer decides that he will prove himself and will move mountains. He gets down to business with ardor, trying to impose his approach, suffers several failures and falls into depression. The best thing he can do is to seek help from more experienced colleagues. Help him with this. Perhaps he will come up with some interesting ideas later. This will only make the organization stronger.

Excellent collectors are made from people with parenting or teaching experience. Such people have a unique life experience - the experience of upbringing. It is very difficult to achieve fulfillment of your demands from children, spontaneous and impatient creatures (those who have passed this test understand the enormity of the task). Such a person can use parental intonations very naturally, is able to give instructions that must be followed, and easily adds a little steel to his voice...

It is easy for a middle-aged lady to use the stereotype of a respectful attitude towards a woman-mother as such. The tone of a strict teacher can put a gray-haired director in his place. It is very difficult to resist such a set of qualities.

When appointing a person to the role of debt collector, first of all, think about how suitable such a job is for him.

Communication styles

According to the model proposed by Eric Berne, there are three communication styles: “parent”, “adult”, “child”. Which one to choose depends on the situation, and their main manifestations are presented in Table 5.

The names of behavior styles are arbitrary. Don't take them too literally. And a two-meter wrestler can choose the “child” style of behavior if he begins to make excuses for his defeat to the coach.

There are three sustainable patterns of behavior.

"Parent-parent." Both sides consider themselves right and have the right to condemn the other. This scheme assumes the rapid development of the conflict. The parties accuse each other, can and will raise their voices, etc. Everything happens very emotionally.

"Parent-child." One of the parties makes excuses, tries to evoke pity or forgiveness. In this case, the development of a conflict is not necessary, but likely. The parties accuse each other, may raise their voices, etc. Everything happens very emotionally.

"Adult-adult." The parties calmly exchange opinions, facts and judgments. Usually such communication is correct and therefore constructive. The participation of emotions is minimal; logical arguments are accepted and taken into account.

There are no other stable combinations. Having determined the behavior pattern of your interlocutor, you can choose your tactics. Either you or your opponents will definitely take the appropriate role. And even if you initially behave according to one model, for example, “adult,” and your opponent either complains (“child”) or is indignant (“parent”), in any case, sooner or later the situation will be resolved. Or you will begin to react to his emotional provocations by adopting the “parent” or “child” model, thus embarking on an unpredictable path to resolving the conflict. Either he will calm down, accept the “adult” model, and then your negotiations will take a rational course.

How does this work in our case?

Table 6. Communication styles and their implementation in practice in creditor-debtor relationships

Communication style	Manifestation by the creditor	Manifestation by the debtor
"Parent"	Demands, threatens, is indignant, indignant	He is indignant, reproaches for misunderstanding, teaches how to conduct business with such important Clients as him
"Adult"	Reminds us of agreements and sanctions. Offers solutions to problems, ways out of the situation. Looking for a compromise	State the reasons why he cannot pay at the moment. Offers options for solving the problem, ways out of the situation. Looking for a compromise
"Child"	He asks and begs to repay the debt. Tells him what problems he will have if the bill is not paid	Avoids communication, obviously lies, complains about the lack of money, about subcontractors or his Clients, about the company management and other third parties. He asks to put himself in his position. Emotionally apologizes, asks and demands to punish him personally (especially if this is impossible for various reasons)

As we see, only one communication scheme leads to a constructive result. Strive for adult-to-adult communication.

A reminder on the professional development of a credit manager

Keep track of the time. The longer a bill goes unpaid, the less likely it is that it will be paid at all. Determine when it is time to contact a collection agency or file a lawsuit.

Get ready. Review all papers before calling the debtor. You need to clearly know how the relationship with this Client developed, what is his credit history, promises and obligations on both sides. Keep these notes handy when you call.

Step back. Keep a cool head and take a business-like approach to the situation. You entered into a contract, delivered goods, you are owed money, and you have the right to expect payment. Don't lose your head and don't treat the matter as a personal insult. Never shout, raise your voice or make threats - you can also be sued. Avoid getting emotionally involved in your work at all.

If the debtor is upset, talks about personal problems, about his desperate situation, this does not mean that it was because of you that he found himself in such a situation. He owes a debt not to you, but to the company, and you have no right to “forgive” him. Collection is your job, you did not insult or offend the debtor with your call. He's upset about the situation, not you. You will very quickly become neurotic if you let all work moments pass through you.

What should a collections specialist's attitude towards the work be: infectiously positive, upbeat or negative, depressed or defeatist? It is much easier and more pleasant to negotiate with a positive person.

When communicating with him, it is easier to believe that there are no problems between the companies and that everything is being resolved, that a normal business process is taking place.

Stay optimistic. As long as the customer continues to work and answer calls, you still have a chance to collect your debt either yourself or through third parties. No matter what the debtor says and no matter how much he shouts at you, he has property, the thought of which warms the heart of any collection specialist. If the situation is hopeless, you can draw conclusions and learn something new.

Take aim. Make sure you are talking to the right person. Don’t let the debtor get away with words like “You need to talk to accounting.” Find the person who will be responsible for the payment, and get results from him. If after several attempts you cannot get through, tell the secretary that the current situation looks like the person is hiding from you. Explain the reason for your call and, if necessary, indicate a deadline for when you should be contacted. You can phrase this as a requirement.

Control. Monitor the progress of negotiations. Try to keep the conversation focused on discussing the debt and agreeing on a payment schedule. Do not allow the debtor to jump onto some other topics, personal stories, excuses, etc. Remember your main goal is to receive money or guarantee of payment. You didn’t have plans to become the debtor’s friend or simply out-argue him.

Change. It is important to offer new solutions and non-standard moves. If you use the same technique over and over again, sooner or later it will stop working. Debtors will find their own counterarguments, new tricks, and get used to threats. And you will have to change too. And it’s better to do this before your debtors change. You can't be effective unless you have a clear,

a pre-prepared plan. But you will not achieve success if you act only according to the template.

Be prepared for surprises, always strive to behave appropriately to the situation, and not just according to instructions. Each debtor may have its own characteristics and specifics. For example, the Client may be eccentric. Prepare for this. Agree to consider a reasonable gradual payment plan (if you have the authority to do so, of course), and show a willingness to deal with this customer in the future.

Expand your horizons. Accept help from any source, do not limit yourself to personal contacts only with employees of the Customer Relations Department and financial department resources.

Write it down. Take detailed, accurate notes after each contact with the customer, documenting a summary of the conversation. First, this will be needed to collect information about a specific customer. Then such recordings will greatly help you in telephone conversations and will provide invaluable assistance when going to court. These records will be useful in the future when making a decision on granting a loan or supplying a loan.

Strive for certainty. Never let a meeting end with “we’ll talk next week” or “I’ll let you know what I can do.” There should be no ambiguity left. Each contact must be effective and confirmed by a commitment to pay a certain amount by a certain date.

It is necessary to constantly strive for reasonable automation of control over invoices in order to know exactly when the debt arose, how much the debt costs, and what is the payment history of a particular customer. Ideally, you need automated but programmable actions, such as sending letters on the required dates or reminder signals.

Measure. Set your own “daily collection plan.” Let your goals reflect the results of the work, not the amount of work. Here we often give ourselves concessions, but in vain! Remember that the true results are not the number of requests made, but how many deals are closed and payments received.

Keep track of promises. Effective credit managers closely monitor the promises they have made and the promises they have made. There is no point in saying that your own promises must be kept. You should not threaten the debtor with actions that you do not intend to take. In the future, he will note that you are not fulfilling your threats, and will stop reacting even to those that you actually intend to carry out, that is, the effect of psychological influence will be reduced.

Don't look for someone to blame. Finding out who exactly is to blame for the current situation makes you think of a detective story: there will be intrigue, lies, and secret motives... Over time, you will unravel this tangle and find the villain. It will be exciting and, importantly, very long. After some time, the story itself about who said and did what will take several minutes or even hours. But you don’t want to play investigator, but just get your money! If you encounter a problem, don't try to find the culprit. Neither within the team, nor among the employees of the debtor company. There is a situation that needs to be corrected, it needs to be done urgently, and there is no need to waste time sorting out who exactly did or didn’t do what and who caused the debt. This is not so important, especially since you will still be deceived little by little, trying to hide someone else's mistakes. Focus on solving the problem. And only after it is found, try to draw conclusions. Collectively. Look at the problem and figure out how to make sure it doesn't happen again. And only if solving this problem for the entire company as a whole There may be a change in the behavior of a particular employee, it is worth making comments or using stronger expressions or even actions.

Plan. Have a clear action plan for the next 30 days. Know when and who to call, who to meet with. Don't miss these dates.

Have an action plan for the current and next quarters. Here you need to know what tasks need to be solved and understand how to prepare for this.

Have strategic goals for the year. You also need strategic guidelines for the level of debt, plans to reduce it, an idea of ​​how the company’s credit policy as a whole should change and develop - and then you will be able to assess how effective your work was.

Think, plan, be calm and flexible - and then your collection work will be more successful.

Eight main mistakes credit managers make

What actions or, conversely, inaction of yours will enable the debtor to evade his obligations?

1. You expect everything to work out by itself. Not formed. Nobody will take care of your company if you don't take care of it yourself. If you don't take the initiative, nothing will happen. Without your letter, the debt will be quickly and reliably forgotten (quite sincerely). They won’t answer a letter without a call, without a reminder they won’t call, without persistence they won’t pay. Take action!

2. You don't know when is the best time to move on to the next stage. A typical situation is when the debt collection process goes in circles. You send invoices again and again, write the same letters, etc. The debtor finds convincing arguments, you again

write letters, etc. You can walk in this circle and wait that at least this time everything will be resolved by itself, you can endlessly.

Determine for yourself when you move to a new, more stringent level of requirements, regardless of the ingenuity of the debtor and the degree of his persuasiveness.

3. Talk a lot and listen little. There is a very common belief that in order to convince someone, you need to talk a lot. This is wrong. Learn to ask the right questions. Let the debtor himself realize the need to pay you first. Give him the opportunity to speak out so that you can first understand his motives and reasons, and then respond competently to them.

4. You don't keep your own promises. If you promised to send an additional invoice, issue penalties, file a lawsuit and did not do this, the debtor will see that your words are not worth much. It will be very difficult to regain respect. If you yourself do not keep your promises, what makes you think that the debtor will keep his?

5. You make threats. Failure to keep promises is one extreme. Threats against the debtor are another. Don't allow yourself to shout and threaten in vain. No need, it's empty. You will definitely ruin your reputation (no one lives in a vacuum, someone else may find out something unpleasant about you). The debtor can use what is said in his heart against you in court, claiming that you intimidated him and extorted money - there have been such cases. Behave toughly, but always correctly, like a true professional.

6. You act insecure. If you do not have a clear algorithm of actions, if you are poorly prepared, the debtor can cleverly catch you in the fact that you do not know what to do, what to answer, how to behave. If you start to mumble, your mission is failed. More confidence in your voice, less doubt!

7. You don't pay attention to details. By small signs you can recognize large future debts.

Don't sign a sloppy contract or send invoices with errors. Don't forget to take a receipt and call on time. Do not neglect the instructions that have been proven over the years. Accuracy consists of observing small rituals, checking and double-checking documents, and the habit of blowing on water (after getting burned on milk). Be meticulous in the best sense of the word.

8. You do not thank for payment. The foreclosure process is a rather painful procedure. For the debtor as well. No matter how high the passions are, no matter how high the emotions were before, no matter how great the difficulties you overcome, after the payment has been made, the customer has fulfilled his obligations. It is a fact. Thank him for this. You will significantly improve your opinion of yourself in the eyes of the debtor, and who knows, perhaps he will give you a good recommendation in the future.

Debt collection is a complex and problematic process for both parties, so do not give the debtor unnecessary reasons to turn your own mistakes against you and thereby avoid payment.

Enterprise credit policy– this is a set of measures to manage accounts receivable and payable and determine the optimal conditions for providing and receiving commercial loans and loans from lending organizations.

In choosing the optimal level and rational structure of current assets, taking into account the specifics of the activities of each enterprise;

In determining the size and structure of sources of financing of current assets.

Goals of effective credit policy:

1. Increasing product sales volumes in the short and long term to achieve the required profitability.

2. Achieving the required accounts receivable turnover.

3. Limiting the relative growth of overdue receivables.

The type of credit policy of an enterprise characterizes the fundamental approaches to its implementation from the standpoint of the relationship between the levels of profitability and risk of credit activity.

Types of credit policies in relation to product buyers:

1. Conservative(hard) type of credit policy of an enterprise is aimed at minimizing credit risk. By implementing this type of policy, the enterprise strives to obtain high additional profits by expanding the volume of product sales. The implementation mechanism is to reduce the number of buyers of products on credit, minimize the timing of the loan and its size, work on prepayment, and use strict procedures for collection of receivables.

2. Moderate the type of credit policy of an enterprise characterizes the typical conditions for its implementation in accordance with accepted commercial and financial practices and is focused on the average level of credit risk when selling products with deferred payment.

3. Aggressive(soft) type of credit policy of an enterprise, the priority goal of credit activity is maximizing additional profit by expanding the volume of sales of products on credit, regardless of the high level of credit risk. The implementation mechanism is to extend the loan to riskier groups of buyers, increase the loan period and its size, reduce the cost of the loan to the minimum acceptable size, and provide buyers with the opportunity to extend the loan.

In order to manage accounts payable, the structure of the balance sheet liabilities is analyzed and the share of equity and borrowed funds, their ratio is calculated, and the lack of equity funds is determined.

Based on the calculation, the need for borrowed funds is determined. Sometimes it is advisable for an enterprise to take out loans even if its own funds are sufficient, if the effect of attracting and using borrowed funds may be higher than the interest rate. The enterprise's credit policy provides for the choice of a credit institution, the interest rate, and loan repayment terms.

Basic concepts of financial mathematics.

Financial mathematics operates with calculation methods that are very useful in calculating the results of business activities and can take into account three types of equal parameters within a single commercial transaction:

Cost characteristics (amounts of payments, debt obligations, loans, etc.);

Temporary data (dates or terms of payments, duration of grace periods or deferred payments, etc.);

- specific parameters (for example, interest rates, which can also be specified in hidden form).

Methods of financial and economic calculations make it possible to determine:

Interest, interest money and interest rates;

Data for calculating simple and compound interest;

Increase in funds at simple and compound interest rates;

Data for performing valuation of financial payment flows;

Data for planning the repayment of debt, loans, loans, etc.

Interest- this is income from the provision of capital in debt in various forms (loans, credits, etc.), or from investments of an industrial or financial nature.

Interest rate– this is a value characterizing the intensity of interest accrual.

The amount of income received (i.e. interest) is determined based on the amount of invested capital, the period for which it is lent or invested, the size and type of interest rate (rate of return).

Increase (growth) of the initial amount of debt– this is an increase in the amount of debt due to the addition of accrued interest (income).

Multiplier (coefficient) of increase– this is a value showing how many times the initial capital has grown.

Accrual period– this is the period of time for which interest is calculated (income is obtained).

Accrual interval– this is the minimum period after which interest accrues.

There are two ways to determine and calculate interest:

1. Decursive. Interest is calculated at the end of each accrual interval. Their value is determined based on the amount of capital provided. The decursive interest rate (loan interest) is the ratio, expressed as a percentage, of the amount of income accrued for a certain interval to the amount available at the beginning of this interval.

2. Antisipative (preliminary). Interest is calculated at the beginning of each accrual interval. The amount of interest money is determined based on the accrued amount. Anticipatory interest (discount rate) will be the ratio, expressed as a percentage, of the amount of income paid for a certain interval to the amount of the accrued amount received after this interval.

In both cases of interest calculation, interest rates can be:

- simple– if they are applied to the same initial monetary amount throughout the entire accrual period;

- complex– if after each accrual interval they are applied to the amount of debt and interest accrued for previous intervals.

Using well-known methods of financial and economic calculations, it is possible to calculate, for example:

Compound interest is calculated several times a year;

Discounting at a compound interest rate;

Loan term and interest rate level;

Equivalence of simple and compound interest rates;

An accrued amount of a constant financial amount with payments to be made at the end of the period;

The current value and term of the annuity with payment of payments at the end or beginning of the periods;

Annuities (permanent annuities) with simple interest and much more.

Ministry of Agriculture

FGOU VPO Irkutsk State Agricultural Academy

Department of Finance and Analysis

Course work

Discipline: “Short-term financial policy”

On the topic: Enterprise credit policy"

using the example of Progress OJSC

Completed by: student

4 courses 2 groups economy. faculty

specialist. 080105.65

Trubitsina D.S.

Checked by: senior

teacher

Khusnudinova Elena

Anatolievna

Irkutsk, 2010

Introduction………………………………………………………………………………...…3

1. Validity, necessity and efficiency of using credit resources…………………………………………..…………………..5

1.1. Concept and structure of enterprise credit resources…………..……5

1.2. The essence of the enterprise’s costs for using credit resources………………………………………………………………………………….8

1.3. Justification of new approaches to the methodology for forecasting enterprise costs for using credit resources……………………………11

2. Analysis of the enterprise’s credit policy…………………………..………18

2.1. Concept and types of enterprise credit policy………………..…..18

2.2. Brief economic characteristics of Progress OJSC………………27

2.3. Analysis of the creditworthiness of Progress OJSC………………………...28

3. Ways to improve the credit policy of an enterprise…………...…40

Conclusion……………………………………………………………………………….…43

References……………………………………………………………44

Appendix…………………………………………………………………………………46

Introduction

Credit policy is a sonorous name that implies only an answer to three simple questions: to whom should a loan be provided, on what terms and how much? The main criterion for the effectiveness of credit policy is an increase in profitability in the core activities of the enterprise, either due to an increase in sales volumes, or due to the acceleration of the turnover of receivables. Finding the optimal point in commercial lending helps to use marginal analysis, the formal language of which strictly defines the desired balance in the volume and timing of deferred payment: liberalization of credit policy is appropriate until “until the additional benefits from an increase in sales volume are equal to the additional costs of the loan provided ".

Credit policy is intended to act as a kind of “cookbook”, limiting the madness of creative initiatives and personal calculations of individual individuals. The substantive basis of credit policy are the tools that guide sales structures when providing credit to suppliers and standards for granting credit that establish reasonable rules and restrictions.

The problem of this study has relevance in the modern world.

In order to ensure the competitiveness and attractiveness of the goods sold, in modern practice, the sale of goods on credit (with deferred payment) has been widely developed.

The purpose of this work is to consider the credit policy of the enterprise and develop measures to improve it.

To achieve this goal, it is necessary to solve the following tasks:

1. define the concept and structure of the enterprise’s credit resources;

2. describe the credit policy of the enterprise;

3. analyze measures to improve the enterprise’s credit policy.

The object of the study is Progress OJSC.

The subject of the study is the economic relations that arise between an enterprise and a bank regarding the provision of funds on credit.

The theoretical basis of the research is educational, scientific and methodological literature on the issues discussed in the work, analytical and information materials published in Russian periodicals. The information base for the study is statistical materials, the annual report for 2006-2007. Progress OJSC: balance sheet (form 1) and its appendix (form 5), profit and loss statement (form 2), statement of changes in capital (form 3), main indicators (in agriculture - Form 6 of the APC).

To solve the problems, the following methods were used: statistical, abstract-logical, calculation-constructive and economic-mathematical.

1. Validity, necessity and efficiency of using credit resources

1.1. Concept and structure of enterprise credit resources

An enterprise's credit resources are part of its own capital and borrowed funds, directed in cash to active credit operations. Moreover, at the moment of using credit resources, they cease to be a resource for the enterprise, since they are no longer a reserve (loan repayment is a risky operation), but become invested credit resources.

Credit resources are divided into current credit resources and instant credit resources.

Calculation of the size of current credit resources, that is, resources that we can potentially still use for credit investments, is determined by the formula:

Current credit resources = Credit potential - Invested credit resources

Instant credit resources are the amount of resources that can be used to issue a loan at a particular point in time, determined by the formula:

Instant credit resources = Corr. balances. account + Current receipts - Current payments + Highly liquid resources (HLR) + excess cash in the cash register of the enterprise

The transition to market relations has seriously changed the structure of enterprise resources. The structure of the resources of an individual enterprise depends on the degree of its specialization or, conversely, universalization, the characteristics of its activities, and the state of the loan market.

The enterprise's own funds are formed from the authorized capital, funds and retained earnings.

The authorized capital is formed from contributions from enterprises, associations and organizations, consists of the nominal value of shares, and serves as the main security for the obligations of the enterprise.

The enterprise council independently approves the regulations on the procedure for the formation and use of its funds.

The reserve fund is intended to cover possible losses of the enterprise from its operations. The minimum size of the reserve fund is determined by the organization's charter, but cannot be less than 15% of the authorized capital. The source of formation of the reserve fund is deductions from profits directed to the fund in accordance with the law.

Enterprises also form special funds: “Depreciation of fixed assets”, “Depreciation of industrial equipment”, formed by depreciation; economic stimulus funds created from profits. World experience provides us with various methods for determining the amount of equity (capital) of an enterprise. The amount of capital calculated using one method or another will be different.

Unjustified overestimation of capital during calculation leads to false information about the successful state of the enterprise. Based on the overestimated amount of equity capital, it expands its active operations, exposing itself to increased risks. On the contrary, if the methodology for determining the amount of capital leads to its artificial understatement, then there will be a narrowing of the range of active operations and, consequently, a decrease in income.

It is known that the amount of capital adequacy of an enterprise is influenced by the volume, composition, quality and nature of active operations. The enterprise's focus on primarily carrying out operations associated with high risk requires a relatively large amount of equity capital, and, conversely, the predominance of loans with minimal risk in the enterprise's credit portfolio allows for a relative decrease in equity capital. The amount of equity capital required by an enterprise also depends on the specifics of its clients.

A measure of capital adequacy is the ratio of the enterprise's capital and asset portfolio. Over the course of several years, this indicator has undergone various changes in world practice. In the 80s, the issue of capital assessment methodology became the subject of debate in international financial organizations. The goal was to develop common capital adequacy criteria applicable to different community entities, regardless of their country affiliation. The main general indicator of capital adequacy is the risk assets ratio, which is determined by the formula:

The capital adequacy ratio of an enterprise is defined as the ratio of equity (capital) to the total volume of risk-weighted assets, minus the amount of reserves created for the depreciation of securities and for possible loan losses.

The capital (own funds) of an enterprise is defined as the amount:

Authorized capital of the enterprise;

Enterprise funds;

Retained earnings increased by:

Reserve for possible losses on loans of risk groups 1 and 2;

Accumulated coupon income received (paid) in advance;

Revaluation of funds in foreign currency

Revaluation of securities traded on the securities market;

reduced by:

Damages incurred;

Purchased own shares;

Excess of the authorized capital over its registered value;

Under-created mandatory reserve for depreciation of investments in securities;

Loans, guarantees and sureties provided in excess of limits;

Excess of costs for the acquisition of tangible assets over own sources;

Deferred expenses for accrued but unpaid interest;

Accounts receivable lasting more than 30 days;

Calculation with enterprise organizations for allocated funds.

Despite its small share, the company’s own capital performs several vital functions:

1. protective function - means the possibility of paying compensation to investors in the event of liquidation of the enterprise;

2. operational function - it is known that to start successful operation, an enterprise needs start-up capital, which is used to purchase buildings, equipment, and create financial reserves in case of unforeseen losses. Own capital is also used for these purposes;

3. regulatory function - associated with the interest of society in the successful functioning of enterprises, as well as with laws and rules that allow government bodies to carry out regulatory and control functions.

1.2. The essence of the enterprise’s costs for using credit resources

Speaking about the essence of the enterprise’s costs for using credit resources, we are faced with the concept of the principle of payment. This is one of the principles of lending, which also include: the principle of repayment, urgency, differentiation, loan security and payment.

Refund means that the funds must be returned. The economic basis of repayment is the circulation of funds and their mandatory availability by the loan repayment deadline. Actually, credit as an economic category differs from other categories of commodity-money relations in that here the movement of money occurs on the terms of repayment. Repayment is a necessary feature of a loan.

The principle of urgency lending means that the loan must not only be repaid, but repaid within a strictly defined period. The urgency of lending is the necessary standard for achieving loan repayment. The established loan period is the maximum time the borrowed funds will remain with the borrower. If the term of use of the loan is violated, then the essence of the loan is distorted and it loses its true purpose. The practice of long-term violation of the principle of urgency in lending to enterprises and individual industries has a negative impact on the state of money circulation in the country.

It must be emphasized that in market economic conditions the principle of urgency acquires special significance. The normal provision of social reproduction with money depends on its observance.

Differentiation of lending means that commercial banks should not have the same approach to resolving the issue of issuing loans to clients applying for a loan. Banks strive to provide loans only to those clients who are able to repay them on time. For these purposes, the bank, based on creditworthiness indicators, determines the financial condition of the enterprise in order to be confident in the borrower’s ability to repay the loan within the period stipulated by the agreement.

Secured loans as a lending principle means that the borrower's property, valuables or real estate allow the lender to be confident that the loan will be repaid on time. This principle presupposes the actual collateral of loans provided to the borrower by various types of property or obligations of the parties. To ensure timely repayment of the loan, creditors under the agreement assign a pledge, surety or guarantee, as well as obligations in other forms accepted in practice.

When giving a loan against collateral, the lender checks to what extent the pledged property meets the requirements, in particular whether its liquidity is ensured. The liquidity of such assets (inventory, equipment, machinery, inventory, vehicles, etc.) refers to the ability of assets to quickly turn into money.

Loan repayment methods are important, so let’s look at them in more detail. The most common type of loan is a loan against inventories, since they are the most reliable collateral for a loan. The loan can be secured by goods and material assets. When issuing large loans, real estate is accepted as collateral. Loans secured by real estate are called mortgage loans. Land plots and agricultural buildings and premises are used as collateral for mortgage loans for enterprises of various forms of ownership.

Now it is necessary to take a more detailed look at the payment principle, since it most fully reflects the essence of the enterprise’s costs for using a loan. So, the principle of payment for a loan means that the borrowing company must pay the bank a certain fee for temporarily borrowing money from it. In practice, this principle is implemented through the mechanism of bank interest.

Bank interest is a fee received by the lender from the borrower for the use of borrowed funds. Payment of interest in a market economy is nothing more than the transfer of part of the profit received by the borrower to his lender. The natural requirement of the creditor for payment for borrowed funds is determined by the fact that he transfers part of his capital to the debtor, thus depriving himself of the opportunity to receive his own profit during the validity of the credit transaction. A loan at its final stage is a return of value, and interest is an increment to the loan. Loan interest, therefore, is a kind of loan price that guarantees the rational use of the loaned value and the preservation of the mass of credit resources. At the same time, the repayment of the loan should have a stimulating effect on the economic calculations of enterprises, encouraging them to increase their own resources and economically spend their own funds.

1.3. Justification of new approaches to forecasting techniques

expenses of the enterprise for using credit resources

There are several types of approaches to consider this problem. Among them there are both new and time-tested.

Financial coefficients for assessing the creditworthiness of commercial bank clients. In global and Russian banking practice, various financial ratios are used to assess the creditworthiness of a borrower. Their choice is determined by the characteristics of the bank’s clientele, possible causes of financial difficulties, and the bank’s credit policy. There are several categories of odds:

1. liquidity ratios;

2. efficiency or turnover ratios;

3. financial leverage ratios;

4. profitability ratios;

5. debt service ratios.

The creditworthiness indicators included in each of these groups can be very diverse.

The current ratio shows whether the borrower is in principle able to pay off its debt obligations.

The current ratio involves a comparison of current assets, i.e. funds available to the client in various forms with current liabilities, i.e. obligations with immediate repayment dates (loans, debt to suppliers, bills, budget, workers and employees.

Liquid assets represent that part of current liabilities that relatively quickly turns into cash. The purpose of the quick liquidity ratio is to predict the borrower's ability to quickly release funds from its turnover in cash to repay the bank's debt on time.

Efficiency (turnover) ratios complement the first group of ratios - liquidity indicators and allow us to make a more informed conclusion. Efficiency ratios are analyzed over time and also compared with those of competing firms and with industry averages.

Profitability ratios characterize the efficiency of using all capital, including its attracted part. The varieties of these coefficients are:

1. profitability ratios:

Net operating profit;

Net profit after interest and taxes;

2. profitability ratios - a comparison of three types of profitability ratios shows the degree of influence of interest and taxes on the profitability of the company;

3. Earnings per share ratios - debt service ratios (market ratios) show how much of the profit is absorbed by interest and fixed payments.

Debt service ratios show how much of earnings are used to repay interest or all fixed payments. These coefficients are of particular importance at high rates of inflation, when the amount of interest paid can be close to the client’s principal debt or even exceed it. The larger part of the profit is used to cover interest paid and other fixed payments, the less it remains to pay off debt obligations and cover risks, i.e. the worse the client's creditworthiness.

The listed financial ratios can be calculated on the basis of actual reporting data or forecast values ​​for the planned period. In a stable economy or relatively stable client situation, an assessment of the borrower's future creditworthiness may be based on actual performance in past periods. In foreign practice, such actual indicators are taken for at least three years. In this case, the basis for calculating creditworthiness ratios is the average for the year (quarter, half-year) balances of inventories, accounts receivable and payable, funds on hand and in bank accounts, the amount of share capital (authorized capital), equity capital, etc.

In conditions of an unstable economy (for example, a decline in production), high inflation rates, actual indicators for past periods cannot be the only basis for assessing the client’s ability to repay his obligations, including bank loans, in the future. In this case, either forecast data should be used to calculate these coefficients, or the considered method of assessing the creditworthiness of an enterprise (organization) will be supplemented by others. The latter includes an analysis of business risk at the time of issuing a loan and an assessment of management.

The described financial creditworthiness ratios are calculated on the basis of average balance sheet balances at reporting dates and do not always reflect the real state of affairs and are relatively easily distorted in reporting. Therefore, in world banking practice, a system of coefficients is also used, calculated on the basis of results. This account contains the reported turnover figures for the period. The initial turnover indicator is sales revenue. By excluding individual elements from it (material and labor costs, interest, taxes, depreciation, etc.), intermediate indicators are obtained and ultimately net profit for the period is obtained.

Net cash balance is the difference between the cash assets and liabilities of the balance sheet. Asset cash is the balance of money on hand and in bank accounts. Cash liability – short-term loans for current production activities. Therefore, the net cash balance shows the amount of the client’s own funds deposited in the cash register and in the account.

Cash flow analysis is also a way to assess the creditworthiness of a commercial bank client, and this indicator, in turn, is precisely a factor in determining the enterprise’s costs for using credit resources. This analysis is based on the use of actual indicators characterizing the client’s turnover of funds in the reporting period.

Cash flow analysis consists of comparing the outflow and inflow of funds from the borrower over a period usually corresponding to the term of the loan requested. When issuing a loan for a year, cash flow analysis is done on an annual basis, for a period of up to 90 days - on a quarterly basis, etc.

The elements of the inflow of funds for the period are:

1. profit received in a given period;

2. depreciation accrued for the period;

3. release of funds from:

Inventories;

Accounts receivable;

fixed assets;

Other assets;

4. increase in accounts payable;

5. growth of other liabilities;

6. increase in share capital;

7. issuance of new loans;

The elements of outflow of funds include:

1. payment of taxes, interest, dividends, fines and penalties;

2. additional investments in:

Accounts receivable;

Other assets;

Fixed assets;

3. reduction of accounts payable;

4. reduction of other liabilities;

5. outflow of share capital;

6. repayment of loans;

The difference between the inflow and outflow of funds determines the amount of total cash flow. To determine this influence, the balances of inventory items, debtors, creditors, etc. are compared. at the beginning and end of the period. An increase in the balance of inventories, debtors and other assets during the period means an outflow of funds and is shown in calculations with a “-” sign, and a decrease means an inflow of funds and is recorded with a “+” sign. An increase in creditors and other liabilities is considered as an inflow of funds ("+"), a decrease - as an outflow ("-").

There are features in determining the inflow and outflow of funds in connection with changes in fixed assets, not only the increase or decrease in the value of their balance for the period is taken into account, but also the results of the sale of part of the fixed assets during the period. The excess of the sales price over the balance sheet valuation is considered as an inflow of funds, and the opposite situation as an outflow of funds.

The cash flow analysis model is based on grouping the elements of inflow and outflow of funds into areas of enterprise management. The following blocks may correspond to these areas in the cash flow analysis (CAM) model:

1. enterprise profit management;

2. inventory and settlement management;

3. management of financial obligations;

4. tax and investment management;

5. management of the ratio of equity capital and loans.

To analyze cash flow, data is taken for at least three past years. If the client had a stable excess of inflows over outflows of funds, then this indicates his financial stability, as well as his creditworthiness. Fluctuations in the value of the total cash flow, as well as a short-term excess of outflows over inflows of funds indicate a lower rating of the client in terms of creditworthiness.

Analysis of cash flow allows us to draw a conclusion about the weak points of enterprise management. For example, the outflow of funds may be associated with inventory management, settlements (debtors and creditors), financial payments (taxes, interest, dividends). Identification of management weaknesses is used to develop lending conditions reflected in the loan agreement. To decide the feasibility and size of issuing a loan for a relatively long period, cash flow analysis is done not only on the basis of actual data for past periods, but also on the basis of forecast data for the planned period. New methods of cost forecasting also include business risk analysis as a way to assess a client's creditworthiness.

Business risk is the risk associated with the fact that the circulation of the borrower's funds may not be completed on time and with the expected effect. Business risk factors are various reasons leading to interruption or delay in the circulation of funds at certain stages. Business risk factors can be grouped according to the stages of the cycle.

So, all of the above methods of forecasting the costs of a company taking out a loan make it possible to fully determine the client’s creditworthiness, which in turn leads to stabilization not only of the loan issuance process itself, but also of the entire credit system as a whole.

2. Analysis of the enterprise’s credit policy

2.1. Concept and types of enterprise credit policy

Credit policy is a system of measures and rules aimed at implementing control over the implementation and use of loans provided by a company or bank. The credit policy of an enterprise, among other things, may include a system of rules for building relationships with customers, which also includes a debt collection procedure.

The credit policy may be written in a lengthy document containing detailed instructions or may be as short as one page.

Credit policy should include:

1. thoughtful work with the client: rules for segmenting types of customers and rules for working with each segment;

2. distribution within the company of work related to interaction with debtors;

3. the procedure for collecting debts internally;

4. description of situations in which the debt is transferred to a collection agency for collection;

5. description of situations in which the debtor is sued.

This system must be recorded on paper. It is clear that every enterprise and every person has some kind of internal sensations, focusing on which they decide whether they can lend to a given person or enterprise or not. The question is whether these sensations are only internal or whether they are written down and understood by all employees of the enterprise in the same way, whether there are clear instructions for each of the employees of the enterprise and for every possible situation.

The main goal of the enterprise is to achieve profit. Typically, profits increase as sales volume increases. One of the most effective ways to increase sales is to provide goods on credit. There are the following reasons for this:

1. it is possible to attract a buyer who does not have enough funds for an advance payment;

2. the buyer is able to buy more or more expensive goods.

When developing an enterprise's credit policy, it is necessary to take into account not only the terms of sales on credit, but also the internal structure of the enterprise's management. Enterprise management, as a rule, faces all sorts of problems here. Typically, the sales department or sales agent not only does not act together with the credit department, if the enterprise has one, but even distrusts it. This is due to the fact that the sales agent is primarily interested in selling goods and receiving commissions for this, as a rule, he only risks that the commission will not be paid to him. In case of non-payment, either the accountant or the sales department itself deals with the repayment of the debt. The function of an accountant is the accounting function of the enterprise, and the task of the sales department is to increase sales. Therefore, they are not only unable to formulate the credit policy of the enterprise and engage in debt collection, but they will probably do this without any desire, and sometimes even sabotage this work.

Within the framework of the enterprise’s credit policy, the following tasks are solved:

1. increasing sales volume by providing customers with more favorable conditions;

2. acceleration of turnover of receivables and payables;

3. minimizing lost benefits from the inability to use the amount of debt and losses from inflationary depreciation of the amount of debt;

4. minimizing financial risks associated with a possible shortage of funds due to late repayment of receivables, with the write-off of bad debts;

5. determining the circle of creditors, forms and volumes of borrowing, taking into account the characteristics of the production and financial cycles of the enterprise;

6. minimizing the cost of borrowed capital;

7. switching to alternative sources of borrowing as the need arises;

8. monitoring the timeliness of debt repayment and interest payments, choosing forms of debt restructuring if necessary;

9. maintaining a balance between current assets and current liabilities in amounts and terms.

The enterprise's credit policy consists of organically interconnected blocks: accounts receivable management and accounts payable management. When developing a credit policy, an enterprise must take into account the following factors:

1. the general state of the country’s economy, if the enterprise operates on the foreign market, then the state of the world economy and the main trends in its development;

2. competitive environment, the state of demand for products, conditions in commodity and financial markets;

3. development of the regulatory framework regarding the collection of receivables;

4. the existing practice of conducting trade operations at the enterprise, the presence of a well-developed contractual framework;

5. financial capabilities of the enterprise in terms of diversion of part of the working capital into accounts receivable.

The credit policy is adopted for a year, after which the goals and objectives, adopted standards, approaches and conditions for the enterprise are clarified.

The enterprise's credit policy answers four questions:

1. to whom should the loan be provided?

2. for how long?

3. in what sizes?

4. what are the sanctions for non-compliance with the conditions (client/manager)?

The goals of an enterprise's credit policy should be: increasing the efficiency of investing funds in accounts receivable, increasing sales volume (profit from sales) and return on investment.

In addition to formalizing the goals of managing receivables in the credit policy, it is necessary to define tasks, the solution of which will allow achieving target values ​​(for example, entering new markets, winning a larger share of the existing market, building a reputation, minimizing the cost of credit resources). Each formulated task must have a quantitative measurement and deadlines for completing the work.

When the company's goals, its strategy, market conditions and other significant factors change, the credit policy must be revised.

For the purposes of this provision, credit policy refers to the sale of goods to customers of an enterprise on credit, in the form of providing customers with installment plans or deferred payment under a contract for the supply of goods (commercial credit).

Providing a loan is not the central competitive advantage of an enterprise, that is, focusing the client’s attention on this and first of all declaring the possibility of providing a loan in negotiations when working with clients is prohibited. Therefore, during negotiations, you should always try to work with prepayment. If full prepayment is not possible, you should try to get a partial prepayment. And only in the case when the client makes convincing arguments for the need to provide him with a loan, and provided that this client is of interest to the enterprise (is a target), should one begin to discuss the loan terms offered by the enterprise.

The essential indicators of credit policy are:

1. determining the conditions for providing a trade loan;

2. calculation of the maximum period for providing a trade loan;

3. compilation of a “discount matrix” - a table containing discount options for goods shipped (services provided) depending on the terms of payment. That is, the price indicated in the price list is the price of the goods provided on credit for the maximum specified period.

When choosing the type of credit policy, the following main factors should be taken into account:

1. the general state of the economy, which determines the financial capabilities of buyers and their level of solvency;

2. the current situation on the commodity market, the state of demand for the organization’s products;

3. the potential ability of the enterprise to increase the volume of production while expanding the possibilities for its sale through the provision of credit;

4. legal conditions for ensuring the collection of receivables;

5. financial capabilities of the enterprise in terms of diversion of funds into accounts receivable.

The indicators that determine credit policy are the following four characteristics:

1) loan period - the period of time during which customers must pay for the purchased goods;

2) creditworthiness standards - the minimum financial stability that clients must have to obtain the possibility of deferred payment, and the size of permissible loan amounts provided to various categories of clients;

3) payment collection policy - determined by the degree of loyalty towards clients who delay payments, from the point of view of providing a loan again;

4) discounts provided for payment at an earlier date; these benefits include the discount amount and the period during which they can be availed.

There are three fundamental types of credit policy of an enterprise in relation to buyers of products - conservative, moderate and aggressive, which characterize the fundamental approaches to its implementation from the standpoint of the ratio of profitability levels and risk of the enterprise's credit activity.

The conservative type of credit policy of an enterprise is aimed at minimizing credit risk. Such minimization is considered a priority goal for its lending activities. The mechanism for implementing this type of policy is a significant reduction in the number of buyers of products on credit at the expense of high-risk groups; minimizing the terms of the loan and its size; tightening the conditions for granting credit and increasing its cost; use of strict procedures for repayment of receivables.

A moderate type of credit policy of an enterprise characterizes the conditions for its implementation in accordance with accepted commercial and financial practices and is focused on the average level of credit risk when selling products with deferred payment.

The aggressive (soft) type of credit policy of an enterprise sets the priority goal of credit policy to maximize additional profits by expanding the volume of product sales on credit, regardless of the high level of credit risk that accompanies these operations. The mechanism for implementing this type of policy is to extend credit to riskier groups of product buyers; increasing the loan period to the minimum acceptable size; Providing buyers with the possibility of extended credit..

To select the optimal credit policy, a company must weigh the potential benefits of increased sales against the cost of providing additional trade credit (credit checks, additional administrative costs, etc.) and the risk of possible non-payment.

Credit policy can be based on both formal and non-formal criteria:

1. Purchase and payment history of buyers. Payment history can be obtained through informal contacts with banks and other client partners;

2. The solvency of buyers can be assessed based on the credit history of the relationship between the buyers of the enterprise;

3. Current analysis and prospective assessment of the financial stability of buyers.

For this purpose, the same sources of information as indicated above can be used, as well as informal opinions of familiar professionals working in the client’s industry, recommendations of independent analysts, news and reports of specialized business information agencies.

Caution when choosing an enterprise's credit policy is due to the fact that doing business in the current conditions is associated with ongoing economic instability and numerous commercial risks. It is in such an environment that enterprises must make responsible decisions that affect not only their material interests, but also the interests of their partners. So the problem under consideration of choosing a credit policy in relation to product buyers is important for almost everyone involved in business.

The main economic unit in the economy of any state is an enterprise, which acts in a variety of organizational and legal forms: sole proprietorships, general partnerships, limited liability companies, joint-stock companies, etc. What they have in common is that, in accordance with current legislation, they are required to submit a certain set of information about their business activities to government agencies. And they bear financial and administrative responsibility for its accuracy. All other economic indicators, as a rule, are hidden by organizations under the pretext of commercial secrets, access to which is possible only operationally.

This leads to one of the important methodological conclusions: economic indicators of organizations’ activities are incomplete, and it is quite difficult to obtain them. Only joint stock companies provide fairly extensive information about themselves in their annual reports to shareholders. This has a significant impact on the formation of credit policy in relation to a specific buyer. Obviously, in conditions of a large number of non-payments, the less information about its commercial activities the buyer enterprise is willing to provide, the stricter the seller’s credit policy will be towards it.

Open information, with the appropriate application of economic analysis methods, can enable the selling enterprise to draw more accurate conclusions about the state of the production, sales and financial program of the organization that acts as the buyer.

In addition, the following main factors should be taken into account in the process of choosing a credit policy:

1. modern commercial and financial practices for carrying out trading operations;

2. the general state of the economy, which determines the financial capabilities of buyers and their level of solvency;

3. the current situation on the commodity market, the state of demand for the enterprise’s products;

4. the potential ability of the enterprise to increase the volume of production while expanding the possibilities for its sale through the provision of credit;

5. legal conditions for ensuring the collection of receivables;

6. financial capabilities of the enterprise in terms of diversion of funds into accounts receivable;

7. financial mentality of the owners and managers of the enterprise, their attitude to the level of acceptable risk in the process of carrying out business activities.

When determining the type of credit policy, enterprises should keep in mind that its rigid version negatively affects the growth of the volume of their operating activities and the formation of stable commercial ties. At the same time, a soft version of an enterprise’s credit policy can cause excessive diversion of financial resources, reduce the level of solvency of the enterprise, subsequently cause significant costs for debt collection, and ultimately reduce the profitability of working capital and capital employed.

2.2. Brief economic characteristics of Progress OJSC

Initially, the farm was organized in 1960 as a result of the merger of two collective farms “Progress” and “Leninsky Rabochiy” and was named “Kalandrashvili”. As a result of the reorganization, the Kalandrashvili collective farm was renamed into Progress OJSC.

In 2004, Progress OJSC sold its controlling stake to Maslozhirkombinat OJSC, and is currently the main shareholder.

JSC "Progress" is located in the southwestern part of the Bokhansky district. The central estate is located in the village. Olonki is 30 km away. district center r.p. Bohan, and 85 km. from the regional center of Irkutsk and 98 km. from the nearest railway station in Irkutsk.

The delivery points for main agricultural products are:

Grain s. Buret, Irkutsk, Bokhan village

Milk s. Olonki, Irkutsk

Meat Irkutsk

The farm is connected to these points by paved roads. The condition of the roads is satisfactory.

The farm has three branches - Olonki, Vorobyovka, Zakharovskaya, which are connected to the central estate by roads in satisfactory condition. All branches specialize in the production of agricultural products. Ancillary production facilities are located in the central estate - a hotel, a seasonal dining room, workshops, storage facilities, and garages. The farm has a two-level organizational structure.

The production capacity of the enterprise allows us to produce:

1. crop products – grains and legumes, barley, oats, rapeseed, other products;

2. livestock products – livestock and poultry (cattle), whole milk, meat and meat products;

The main activity of Progress OJSC is the production and sale of crop and livestock products. The most important, effective indicators for assessing the economic activity of any enterprise are profit, and if there is none, then cost recovery. The amount of profit received by an agricultural enterprise characterizes the efficiency of using production assets, land, labor, material and monetary resources.

2.3. Analysis of the creditworthiness of Progress OJSC

In the process of relationships between enterprises and the credit system, as well as with other enterprises, there is a constant need to analyze the borrower’s creditworthiness. Creditworthiness analysis is carried out both by banks issuing loans and by enterprises seeking to obtain them.

During the creditworthiness analysis, calculations are made to determine the liquidity of the enterprise's assets and the liquidity of its balance sheet.

The liquidity of assets is the reciprocal of the time required to convert them into money, i.e. The less time it takes to turn assets into money, the more liquid the assets are.

Balance sheet liquidity is expressed in the degree to which the enterprise's liabilities are covered by its assets, the period of transformation of which into money corresponds to the period of repayment of obligations. Balance sheet liquidity is achieved by establishing equality between the enterprise's liabilities and its assets. In this case, assets must be grouped according to the degree of their liquidity and the groups are arranged in descending order, and liabilities - according to their maturity dates and are arranged in increasing order of payment terms.

The assets of an enterprise, depending on the speed of converting them into money, are divided into four groups:

1. The most liquid assets A1 are cash and short-term financial investments;

2. Quickly realizable assets A2 – accounts receivable and other assets;

3. Slowly realizable assets A3 – inventories, except deferred expenses, plus long-term financial investments;

4. Hard-to-sell assets A4 – non-current assets without long-term financial investments.

The enterprise's liabilities (balance sheet liability items) are also divided into four groups and arranged according to the degree of urgency of their payment:

1. The most urgent obligations P1 – accounts payable;

2. Short-term liabilities P2 – short-term loans and borrowings and other short-term liabilities;

3. Long-term liabilities P3 – long-term loans and borrowings;

4. Constant liabilities P4 – capital and reserves plus lines 630-660 of the balance sheet.

To determine the liquidity of the balance sheet, it is necessary to compare the calculations made for groups of assets and groups of liabilities. The balance sheet is considered liquid with the following ratio of groups of assets and liabilities: A1>=P1; A2>=P2; A3>=P3; A4<=П4.

Let's analyze the relative performance of the enterprise. These include 5 groups of indicators:

1. liquidity ratios;

2. business activity ratios;

3. profitability ratios;

4. financial stability ratios;

5. coefficients of market valuation (activity) of the enterprise.

1. Liquidity ratios - determine the possibility of repaying current obligations within a certain period of time.

The total (current) liquidity ratio is calculated as the quotient of current assets divided by short-term liabilities and shows whether the enterprise has enough funds that can be used to pay off its short-term liabilities over a certain period.

According to generally accepted standards, it is believed that this coefficient should be in the range from 1 to 2-3. The lower limit is due to the fact that there must be at least enough current assets to pay off short-term obligations, otherwise the company will be at risk of bankruptcy. An excess of current assets over short-term liabilities by more than three times may indicate an irrational capital structure.

Ktl = Current assets / Current liabilities = line 290 f. No. 1/ page 690 f. No. 1

For 2006 Ktl = 34206 / 38027 = 0.89

For 2007 Ktl = 35383 / 66367 = 0.53

The quick liquidity ratio is a private indicator of the current liquidity ratio; it reveals the ratio of the most liquid part of current assets (cash, short-term financial investments and receivables) to short-term liabilities. According to international standards, the level of the coefficient should be above 1; in Russia, its optimal value is defined as 0.7-0.8.

Ksl = Cash, accounts receivable, short-term financial investments / Short-term liabilities = (line 260 + 240 + 250) / line 690.

For 2006 Ksl = 5 + 781 / 38027 = 0.02

For 2007 Ksl = 24 + 591 / 66367 = 0.01

In Russian conditions, the most reliable indicator of liquidity can be considered the absolute liquidity ratio, which is calculated as the quotient of cash divided by short-term liabilities. In Western practice, this coefficient is rarely calculated, but in Russia its optimal level is considered to be 0.2-0.25.

Cal = (Cash + Short-term financial investments) / Short-term liabilities = (p. 260 + p. 250) / p. 690

For 2006 Cal = 5 / 38027 = 0.0001

For 2007 Cal = 24 / 66367 = 0.0004

The net working capital indicator is calculated as the difference between the company's current assets and its short-term liabilities. Net working capital is necessary to maintain the financial strength of a business, since the excess of current assets over current liabilities means that the company not only can pay off its short-term obligations, but also has the financial resources to expand its activities in the future. A lack of net working capital can lead a company to bankruptcy, as it indicates its inability to repay short-term obligations in a timely manner. A significant excess of net working capital over the optimal need for it indicates inefficient use of resources.

NOL = current assets – short-term liabilities

For 2006 NER = 34206 – 38027 = -3821

For 2007 NER = 35383 – 66367 = -30984

2. Business activity ratios - characterize the efficiency of an enterprise’s use of its funds. This group includes various turnover indicators, since the turnover rate, i.e. transformation of funds into monetary form has a direct impact on the solvency of the enterprise.

The asset turnover ratio - the ratio of revenue from product sales to the entire balance sheet asset total - characterizes the efficiency of the company's use of all available resources, regardless of the sources of their attraction, i.e. shows how many times during a period the full cycle of production and circulation is completed, bringing the corresponding effect in the form of profit, or how many monetary units of sold products were brought by each monetary unit of assets.

Cob.ac. = revenue then sales / balance sheet currency

For 2006 = 23065 / 89581 = 0.26

For 2007 = 28916 / 117720 = 0.26

The receivables turnover ratio measures how many times on average receivables were converted into cash during the reporting period. The ratio is calculated by dividing revenue from product sales by the average annual value of net receivables. To compare the commercial lending terms that an enterprise uses from other companies with the lending terms that an enterprise provides to other companies, you can compare this indicator with the accounts payable turnover ratio.

Cob.d.z. = sales revenue / accounts receivable

For 2006 = 23065 / 781 = 29.53

For 2007 = 28916 / 591 = 48.93

The accounts payable turnover ratio is calculated by dividing the cost of goods sold by the average annual cost of accounts payable and shows how much turnover a company needs to pay its invoices. Receivables and payables turnover ratios can also be calculated in days. To do this, you need to divide the number of days in a year by the considered indicators. This will show how many days on average it takes to pay receivables or payables respectively.

Kob.k.z. = cost of goods sold / accounts payable

For 2006 = 23791 / 20432 = 1.16

For 2007 = 29855 / 20642 = 1.45

The inventory turnover ratio reflects the speed at which these inventories are sold. It is calculated as the quotient of the cost of goods sold divided by the average annual cost of inventories. To calculate the coefficient in days, you need to divide the number of days by the considered indicator. This way you can find out how many days it takes to sell (without payment) inventories. In general, the higher the inventory turnover rate, the less funds are tied up in this least liquid item of working capital, the more liquid the structure of working capital and the more stable the financial position of the enterprise, all other things being equal.

Cob. mpz. = cost of goods sold / cost of inventory

For 2006 = 23791 / 32416 = 0.73

For 2007 = 29855 / 32542 = 0.92

The duration of the operating cycle is an indicator by which you can determine how many days on average it takes to produce, sell and pay for the company's products, in other words, during what period the funds are tied up in inventories. This indicator is calculated as the sum of the inventory turnover period and the accounts receivable turnover period.

DOC = POZ + Sub.z.

POZ = inventories * 365 / revenue from product sales

For 2006 Poz = 32416 * 365 / 23065 = 513 days.

For 2007 Poz = 32542 * 365 / 28916 = 411 days.

Under.z. = accounts receivable * 365 / revenue from product sales

For 2006. Sub. = 781 * 365 / 23065 = 12 days.

For 2007. Sub. = 591* 365 / 28916 = 8 days.

For 2006, DOC = 513 + 12 = 525 days.

For 2007, DOC = 411 + 8 = 419 days.

The financial cycle begins from the moment suppliers are paid for these materials (repayment of accounts payable) and ends when money is received from customers for shipped products (repayment of accounts receivable). The financial cycle is the period during which a company loses its money.

Financial cycle = Operating cycle - Accounts payable turnover period

POk.z. = accounts payable * 365 / revenue from product sales

For 2006 POkz = 20432 * 365 / 23065 = 323 days.

For 2007 POkz = 20642 * 365 / 28916 = 261 days.

For 2006 FC = 525 – 323 = 202 days.

For 2007 FC = 419 – 261 = 158 days.

3. Profitability ratios - reflect the profitability of the company.

Profitability of sales is calculated as the ratio of net profit after tax to the volume of products sold. This indicator reflects how many monetary units of net profit each monetary unit of sold products brought.

Rototal. = net profit / revenue from product sales * 100%

For 2006. Total. = 2173 / 23065 * 100% = 9.42%

For 2007 Total. = 2516 / 28916 * 100% = 8.7%

The profitability ratio of all assets of an enterprise (return on assets) is calculated by dividing net profit by the average annual value of the enterprise's assets. It shows how many monetary units the company needed to obtain one monetary unit of profit, regardless of the source of raising these funds. This indicator is one of the most important indicators of the competitiveness of an enterprise. The level of competitiveness is determined by comparing the profitability of all assets of a given company with the industry average ratio.

Ren.ac. = (net profit / enterprise assets) * 100%

For 2006 Kren.ak. = 2173 / 89581 * 100% = 22.7%

For 2007 Kren.ak. = 2516 / 117720 * 100% = 2.13%

Return on equity allows you to determine the efficiency of using the capital invested by the owners and compare this indicator with the possible income from another investment of these funds. This ratio can be calculated by dividing net income (after taxes) by the average annual amount of equity. Return on equity shows how many monetary units of net profit earned each monetary unit invested by the company's owners.

Ren.sob.cap. = (net profit / equity) * 100%

For 2006 Ren.sob.cap. = 2173 / 51105 * 100% = 4.25%

For 2007 Ren.sob.cap. = 2516 / 50904 * 100% = 4.9%

4. Financial stability coefficients (solvency or capital structure) - characterize the structure of financial sources, and above all the capital structure. They reflect the company's ability to repay long-term debt.

The equity capital concentration ratio reflects the share of equity capital in the company's capital structure and, thus, the relationship between the interests of the owners of the enterprise and creditors. The value of this indicator, which characterizes a fairly stable financial position, all other things being equal, in the eyes of investors and creditors, is about 60%.

Kksk = equity capital / balance sheet currency

For 2006 Kksk = 51105 / 89581 = 0.57

For 2007 Kksk = 50904 / 117720 = 0.43

The debt capital concentration ratio reflects the share of debt capital in sources of financing. This ratio is the inverse of the ownership ratio.

Ккзк = borrowed capital / balance sheet currency

For 2006 Kkzk = 38027 / 89581 = 0.42

For 2007 Kkzk = 66367 / 117720 = 0.56

The financial dependence ratio characterizes the company's dependence on external loans and represents the ratio of debt capital to equity capital. The higher this ratio, the riskier the situation, which can lead to bankruptcy of the enterprise, and the higher the potential danger of the enterprise having a cash deficit. It is believed that this indicator in a market economy should not exceed one. High dependence on external loans can significantly worsen the company's position in the event of a slowdown in sales, since the company will not be able to reduce the cost of paying interest on borrowed capital, other things being equal, in proportion to the decrease in sales volume.

Kkfz = balance sheet currency / equity

For 2006 Kkfz = 89581 / 51105 = 1.75

For 2007 Kkfz = 117720 / 50904 = 2.31

Debt to equity ratio - the higher the ratio exceeds 1, the greater the enterprise's dependence on borrowed funds. The acceptable level is often determined by the operating conditions of each enterprise, primarily by the rate of turnover of working capital. Therefore, it is additionally necessary to determine the rate of turnover of inventories and receivables for the analyzed period. If accounts receivable turn over faster than working capital, which means a fairly high intensity of cash flow to the enterprise, i.e. the result is an increase in own funds. Therefore, with a high turnover of tangible working capital and an even higher turnover of accounts receivable, the ratio of equity and borrowed funds can far exceed 1.

Кс/з = debt capital / equity capital

For 2006 Ks/z = 38027 / 51105 = 0.74

For 2007 Ks/z = 66367 / 50904 = 1.3

5. Market valuation (activity) coefficients of the enterprise - characterize the value and profitability of the company's shares.

Earnings per share shows how much of the net profit comes from one common share outstanding.

The market price to earnings per share ratio reflects the relationship between a company and its shareholders by showing how many monetary units shareholders pay for one monetary unit of the company's net income. This indicator can be compared for different companies, which is especially important to do over time, assessing the long-term aspect of investing.

The book value of a share shows the value of the enterprise's net assets (equity capital), which is per one ordinary share in accordance with accounting and reporting data.

To determine stock returns, several indicators are calculated. Current yield refers to the dividends that the owner of the stock will receive. This ratio is called dividend yield or dividend rate and is the quotient of the dividend per share divided by the market value of one share.

The dividend payout ratio indicates how much of net profit is spent on dividend payments.

Table 1 - Relative indicators of Progress OJSC for 2006-2007.

index			2007 in% compared to 2006
Liquidity ratios
current ratio
quick ratio
absolute liquidity ratio
net working capital, rub.
Business activity ratios
asset turnover ratio
Debt turnover ratio ass
credit turnover ratio ass
inventory turnover ratio
duration of the operating cycle, days.
financial cycle, days
Profitability ratios
total profitability, %
return on assets, %
return on equity, %
Financial stability ratios
equity concentration ratio
debt concentration ratio
financial dependency ratio
gearing ratio

From the table data we can conclude that the current liquidity ratio in 2007 compared to 2006. less by 40.4%, the quick liquidity ratio is less by 50.0%, and the absolute liquidity ratio is more by 300.0%. The accounts receivable turnover ratio in 2007 compared to 2006 increased by 65.7%, accounts payable and inventories by 25.0% and 26.0%, respectively. The duration of the operating and financial cycles decreased by 106 and 44 days, respectively. Overall profitability decreased by 7.6% in 2007, return on assets also decreased by 90.6%, and return on equity increased by 15.3%. The concentration ratio of equity capital in 2007 compared to 2006 became less by 24.6%, and the concentration ratio of borrowed capital, the coefficient of financial dependence and the ratio of equity and borrowed capital increased by 33.3%, 32.0% and 75.7% respectively.

3. Ways to improve the enterprise’s credit policy

It is advisable to assess the financial condition of an enterprise in the context of balance sheet items that affect the enterprise's creditworthiness indicators.

If there is a tendency towards a deterioration in the creditworthiness of an enterprise, then it should make efforts to prevent a deterioration in its creditworthiness. Such measures should be:

– improving the organization of settlements with debtors and creditors in order to prevent accelerated growth of accounts payable over accounts receivable;

– reduction of expenses on fixed assets and increase in expenses for the formation of working capital;

– reduction in the amount of working capital in inventories and costs.

Thus, the implementation of these activities will help the company achieve higher financial performance, which will allow it to use bank loans more effectively in the future.

As the study showed, the reason for the low creditworthiness of an enterprise is the low level of return on sales, assets and equity. To increase profitability, it is necessary to find reserves for reducing the cost of work (services) of the enterprise by increasing the volume of their implementation and reducing the costs of their implementation.

So, to increase production profitability, an enterprise needs to:

– rationalize pricing policy;

– organize cost savings, including through more rational use of material resources (fuel, materials, energy);

– use the effect of production leverage;

– reduce the share of fixed costs for management personnel and the maintenance of real estate;

– constantly identify and produce in larger volumes the most popular and profitable types of products;

– in order to reduce costs and increase the efficiency of core activities, in some cases it is advisable to abandon some low-profit activities;

– with low product profitability, it is necessary to strive to accelerate the turnover of assets and its elements; in this regard, it may be advisable to increase the number of work shifts at the enterprise.

At the same time, asset productivity is largely determined by internal factors of the organization, such as management and investment policy, therefore, the enterprise should develop measures to improve the enterprise management system.

In addition, it is necessary to begin to provide services on a commercial basis that are not part of the main responsibilities of the enterprise. This could be, for example, internal plumbing work; repair services for residential premises of owners of apartment buildings: plastering and painting, glass, wallpaper, tiling and other works. Providing such services to the population can significantly increase the revenue of an enterprise and, accordingly, its profit from sales.

It should also be noted that in order to increase its own creditworthiness, the company must take care of its own image in business circles, namely, try to establish itself as a reliable partner who fulfills all its obligations in a timely manner. A positive credit history, participation in large projects, high quality of goods and services, high qualifications and stability of management, adaptability to new management methods and technologies, influence in business and financial circles - all this will help improve the image of the enterprise, and therefore strengthening its creditworthiness.

Conclusion

Based on the work done, the following conclusions can be drawn.

Credit policy is a system of measures and rules aimed at implementing control over the implementation and use of loans provided by a company or bank. An enterprise's credit policy may include a system of rules for building relationships with customers, which also includes a debt collection procedure.

Being at different stages of development, enterprises pursue different goals and adhere to different strategic lines. Three main behavioral models can be distinguished:

Expansion of the market niche;

Maintaining a market niche;

Maximize profit with minimal risk.

Without developing a credit policy and an appropriate enterprise structure, it is impossible to increase sales volumes while maintaining an acceptable level of non-payments.

To solve the key task of credit policy - improving the assessment of the creditworthiness of an enterprise, it is necessary:

1. Use an expanded set of financial ratios, since the use of a limited number of them reduces the quality of the analysis;

2. Analyze the dynamics of changes in the financial position of the enterprise over several reporting periods, and not according to the latest balance sheet;

3. To analyze creditworthiness, in addition to analysis based on financial ratios, use cash flow analysis of the enterprise.

Bibliography

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Credit policy is a system of measures and rules aimed at implementing control over the implementation and use of loans provided by a company or bank. The credit policy of an enterprise, among other things, may include a system of rules for building relationships with customers, which also includes a debt collection procedure.

The credit policy may be written in a lengthy document containing detailed instructions or may be as short as one page.

Credit policy should include:

• 1. thoughtful work with the client: rules for segmenting types of customers and rules for working with each segment;
• 2. distribution within the company of work related to interaction with debtors;
• 3. the procedure for collecting debts internally;
• 4. description of situations in which the debt is transferred to a collection agency for collection;
• 5. description of situations in which the debtor is sued.

This system must be recorded on paper. It is clear that every enterprise and every person has some kind of internal sensations, focusing on which they decide whether they can lend to a given person or enterprise or not. The question is whether these sensations are only internal or whether they are written down and understood by all employees of the enterprise in the same way, whether there are clear instructions for each of the employees of the enterprise and for every possible situation.

The main goal of the enterprise is to achieve profit. Typically, profits increase as sales volume increases. One of the most effective ways to increase sales is to provide goods on credit. There are the following reasons for this:

• 1. it is possible to attract a buyer who does not have enough funds for an advance payment;
• 2. the buyer is able to buy more or more expensive goods.

When developing an enterprise's credit policy, it is necessary to take into account not only the terms of sales on credit, but also the internal structure of the enterprise's management. Enterprise management, as a rule, faces all sorts of problems here. Typically, the sales department or sales agent not only does not act together with the credit department, if the enterprise has one, but even distrusts it. This is due to the fact that the sales agent is primarily interested in selling goods and receiving commissions for this, as a rule, he only risks that the commission will not be paid to him. In case of non-payment, either the accountant or the sales department itself deals with the repayment of the debt. The function of an accountant is the accounting function of the enterprise, and the task of the sales department is to increase sales. Therefore, they are not only unable to formulate the credit policy of the enterprise and engage in debt collection, but they will probably do this without any desire, and sometimes even sabotage this work.

Within the framework of the enterprise’s credit policy, the following tasks are solved:

• 1. increasing sales volume by providing customers with more favorable conditions;
• 2. acceleration of turnover of receivables and payables;
• 3. minimizing lost benefits from the inability to use the amount of debt and losses from inflationary depreciation of the amount of debt;
• 4. minimizing financial risks associated with a possible shortage of funds due to late repayment of receivables, with the write-off of bad debts;
• 5. determining the circle of creditors, forms and volumes of borrowing, taking into account the characteristics of the production and financial cycles of the enterprise;
• 6. minimizing the cost of borrowed capital;
• 7. switching to alternative sources of borrowing as the need arises;
• 8. monitoring the timeliness of debt repayment and interest payments, choosing forms of debt restructuring if necessary;
• 9. maintaining a balance between current assets and current liabilities in amounts and terms.

The enterprise's credit policy consists of organically interconnected blocks: accounts receivable management and accounts payable management. When developing a credit policy, an enterprise must take into account the following factors:

• 1. the general state of the country’s economy, if the enterprise operates on the foreign market, then the state of the world economy and the main trends in its development;
• 2. competitive environment, the state of demand for products, conditions in commodity and financial markets;
• 3. development of the regulatory framework regarding the collection of receivables;
• 4. the existing practice of conducting trade operations at the enterprise, the presence of a well-developed contractual framework;
• 5. financial capabilities of the enterprise in terms of diversion of part of the working capital into accounts receivable.

The credit policy is adopted for a year, after which the goals and objectives, adopted standards, approaches and conditions for the enterprise are clarified.

The enterprise's credit policy answers four questions:

• 1. to whom should the loan be provided?
• 2. for how long?
• 3. in what sizes?
• 4. what are the sanctions for non-compliance with the conditions (client/manager)?

The goals of an enterprise's credit policy should be: increasing the efficiency of investing funds in accounts receivable, increasing sales volume (profit from sales) and return on investment.

In addition to formalizing the goals of managing receivables in the credit policy, it is necessary to define tasks, the solution of which will allow achieving target values ​​(for example, entering new markets, winning a larger share of the existing market, building a reputation, minimizing the cost of credit resources). Each formulated task must have a quantitative measurement and deadlines for completing the work.

When the company's goals, its strategy, market conditions and other significant factors change, the credit policy must be revised.

For the purposes of this provision, credit policy refers to the sale of goods to customers of an enterprise on credit, in the form of providing customers with installment plans or deferred payment under a contract for the supply of goods (commercial credit).

Providing a loan is not the central competitive advantage of an enterprise, that is, focusing the client’s attention on this and first of all declaring the possibility of providing a loan in negotiations when working with clients is prohibited. Therefore, during negotiations, you should always try to work with prepayment. If full prepayment is not possible, you should try to get a partial prepayment. And only in the case when the client makes convincing arguments for the need to provide him with a loan, and provided that this client is of interest to the enterprise (is a target), should one begin to discuss the loan terms offered by the enterprise.

The essential indicators of credit policy are:

• 1. determining the conditions for providing a trade loan;
• 2. calculation of the maximum period for providing a trade loan;
• 3. compilation of a “discount matrix” - a table containing discount options for goods shipped (services provided) depending on the terms of payment. That is, the price indicated in the price list is the price of the goods provided on credit for the maximum specified period.

When choosing the type of credit policy, the following main factors should be taken into account:

• 1. the general state of the economy, which determines the financial capabilities of buyers and their level of solvency;
• 2. the current situation on the commodity market, the state of demand for the organization’s products;
• 3. the potential ability of the enterprise to increase the volume of production while expanding the possibilities for its sale through the provision of credit;
• 4. legal conditions for ensuring the collection of receivables;
• 5. financial capabilities of the enterprise in terms of diversion of funds into accounts receivable.

The indicators that determine credit policy are the following four characteristics:

• 1) loan period - the period of time during which customers must pay for the purchased goods;
• 2) creditworthiness standards - the minimum financial stability that clients must have to obtain the possibility of deferred payment, and the size of permissible loan amounts provided to various categories of clients;
• 3) payment collection policy - determined by the degree of loyalty towards clients who delay payments, from the point of view of providing a loan again;
• 4) discounts provided for payment at an earlier date; these benefits include the discount amount and the period during which they can be availed.

There are three fundamental types of credit policy of an enterprise in relation to buyers of products - conservative, moderate and aggressive, which characterize the fundamental approaches to its implementation from the standpoint of the ratio of profitability levels and risk of the enterprise's credit activity.

The conservative type of credit policy of an enterprise is aimed at minimizing credit risk. Such minimization is considered a priority goal for its lending activities. The mechanism for implementing this type of policy is a significant reduction in the number of buyers of products on credit at the expense of high-risk groups; minimizing the terms of the loan and its size; tightening the conditions for granting credit and increasing its cost; use of strict procedures for repayment of receivables.

A moderate type of credit policy of an enterprise characterizes the conditions for its implementation in accordance with accepted commercial and financial practices and is focused on the average level of credit risk when selling products with deferred payment.

The aggressive (soft) type of credit policy of an enterprise sets the priority goal of credit policy to maximize additional profits by expanding the volume of product sales on credit, regardless of the high level of credit risk that accompanies these operations. The mechanism for implementing this type of policy is to extend credit to riskier groups of product buyers; increasing the loan period to the minimum acceptable size; Providing buyers with the possibility of extended credit.

To select the optimal credit policy, a company must weigh the potential benefits of increased sales against the cost of providing additional trade credit (credit checks, additional administrative costs, etc.) and the risk of possible non-payment.

Credit policy can be based on both formal and non-formal criteria:

• 1. Purchase and payment history of buyers. Payment history can be obtained through informal contacts with banks and other client partners;
• 2. The solvency of buyers can be assessed based on the credit history of the relationship between the buyers of the enterprise;
• 3. Current analysis and prospective assessment of the financial stability of buyers.

For this purpose, the same sources of information as indicated above can be used, as well as informal opinions of familiar professionals working in the client’s industry, recommendations of independent analysts, news and reports of specialized business information agencies.

Caution when choosing an enterprise's credit policy is due to the fact that doing business in the current conditions is associated with ongoing economic instability and numerous commercial risks. It is in such an environment that enterprises must make responsible decisions that affect not only their material interests, but also the interests of their partners. So the problem under consideration of choosing a credit policy in relation to product buyers is important for almost everyone involved in business.

The main economic unit in the economy of any state is an enterprise, which acts in a variety of organizational and legal forms: sole proprietorships, general partnerships, limited liability companies, joint-stock companies, etc. What they have in common is that, in accordance with current legislation, they are required to submit a certain set of information about their business activities to government agencies. And they bear financial and administrative responsibility for its accuracy. All other economic indicators, as a rule, are hidden by organizations under the pretext of commercial secrets, access to which is possible only operationally.

This leads to one of the important methodological conclusions: economic indicators of organizations’ activities are incomplete, and it is quite difficult to obtain them. Only joint stock companies provide fairly extensive information about themselves in their annual reports to shareholders. This has a significant impact on the formation of credit policy in relation to a specific buyer. Obviously, in conditions of a large number of non-payments, the less information about its commercial activities the buyer enterprise is willing to provide, the stricter the seller’s credit policy will be towards it.

Open information, with the appropriate application of economic analysis methods, can enable the selling enterprise to draw more accurate conclusions about the state of the production, sales and financial program of the organization that acts as the buyer.

In addition, the following main factors should be taken into account in the process of choosing a credit policy:

• 1. modern commercial and financial practices for carrying out trading operations;
• 2. the general state of the economy, which determines the financial capabilities of buyers and their level of solvency;
• 3. the current situation on the commodity market, the state of demand for the enterprise’s products;
• 4. the potential ability of the enterprise to increase the volume of production while expanding the possibilities for its sale through the provision of credit;
• 5. legal conditions for ensuring the collection of receivables;
• 6. financial capabilities of the enterprise in terms of diversion of funds into accounts receivable;
• 7. financial mentality of the owners and managers of the enterprise, their attitude to the level of acceptable risk in the process of carrying out business activities.

When determining the type of credit policy, enterprises should keep in mind that its rigid version negatively affects the growth of the volume of their operating activities and the formation of stable commercial ties. At the same time, a soft version of an enterprise’s credit policy can cause excessive diversion of financial resources, reduce the level of solvency of the enterprise, subsequently cause significant costs for debt collection, and ultimately reduce the profitability of working capital and capital employed.

The credit policy of the enterprise is to determine the size and timing of the provision of commodity credit to customers, as well as the amount of payment for this credit.

Those. An enterprise supplying its goods with deferred payment must determine for itself the amount of risk that it is willing to bear in the event of non-payment of this loan.

Credit policy should be aimed at excluding high-risk debtor enterprises from the list of partners. To do this you need:

Collect information about customers and analyze it carefully;

Make a decision to grant or refuse a loan.

Depending on the size of the loan, the manager collects very specific, detailed information. Its main sources are: internal information available at the enterprise regarding the client’s past behavior; information provided by banks; information provided by specialized agencies, etc. After studying the financial condition of clients and their significance (minor, major), the manager makes an appropriate decision.

7)Company profitability. Application of the DuPont model when planning company profits.

Developments in the field of factor analysis, which have been ongoing since the beginning of the 20th century, are of great importance for expanding the possibilities of using analytical coefficients for intra-company analysis and management.

First of all, this relates to the development in 1919 of a factor analysis scheme proposed by specialists from the DuPont company (The DuPont System of Analysis). By this time, indicators of return on sales and asset turnover had become quite widespread. However, these indicators were used on their own, without linking them with factors of production. In the DuPont model, for the first time, several indicators were linked together and presented in the form of a triangular structure, at the top of which is the return on total capital ROA as the main indicator characterizing the return received from funds invested in the company's activities, and at the base are two factor indicators - profitability sales NPM and resource efficiency TAT.

This model was based on a strictly determined dependence

where is net profit;

The amount of assets of the organization;

- (production volume) sales revenue.

The original representation of the DuPont model is shown in Figure 1:

Figure 1. Schematic of the DuPont model.

In theoretical terms, DuPont specialists were not innovators; they used the original idea of ​​interrelated indicators, first expressed by Alfred Marshall and published by him in 1892 in the book “Elements of Industrial Economics”. Nevertheless, their merit is obvious, since these ideas have not previously been applied in practice.

Subsequently, this model was expanded into a modified factor model, presented in the form of a tree structure, at the top of which is the return on equity (ROE) indicator, and at the base are signs characterizing the factors of the production and financial activities of the enterprise. The main difference between these models is a more detailed identification of factors and a change in priorities relative to the effective indicator. It must be said that the factor analysis models proposed by DuPont specialists remained unclaimed for quite a long time, and only recently they began to pay attention.

The mathematical representation of the modified DuPont model is:

where is return on equity;

Emergency- net profit;

A - the amount of the organization's assets;

VR -(production volume) sales revenue.

SK- the organization's own capital.

From the presented model it is clear that return on equity depends on three factors: return on sales, asset turnover and the structure of advanced capital. The significance of the identified factors is explained by the fact that they, in a certain sense, generalize all aspects of the financial and economic activities of the enterprise, its statics and dynamics, in particular the financial statements: the first factor summarizes form No. 2 “Profit and Loss Statement”, the second - the balance sheet asset, the third – balance sheet liability.

The purpose of the DuPont model is to identify the factors that determine the efficiency of a business, to assess the degree of their influence and the emerging trends in their change and significance. This model is also used for comparative assessment of the risk of investing or lending to a given enterprise.

All factors in the model, both in terms of significance level and change trends, have industry specific characteristics that the analyst must take into account. Thus, the resource productivity indicator may have a relatively low value in high-tech industries that are characterized by capital intensity; on the contrary, the profitability indicator of economic activity in them will be relatively high. A high value of the financial dependence coefficient can be afforded by firms that have a stable and predictable flow of money for their products. The same applies to enterprises that have a large share of liquid assets (trade and distribution enterprises, banks). Consequently, depending on the industry specifics, as well as the specific financial and economic conditions prevailing at a given enterprise, it can rely on one or another factor to increase the return on equity.