Advanced Credit Policy
This is an advanced course in the analysis and formulation of credit policy, including policies regarding credit investigation, terms of sale, credit-granting, and credit limits. It is intended for experienced people (typically Directors of Credit or similar positions) who must make and enforce credit policy. It is not an introductory course.
The basic text is Frederick C. Scherr, Making Sound Credit Policy Decisions, NACM, 1996, which will be mailed to you as a part of your course fee. You should also have Principles of Business Credit, 8th Edition, as a reference.
The modules explain, discuss and expand on the material in the text. Lectures are by Dr. Frederick C. Scherr, Professor of Finance (Emeritus), West Virginia University.
Upon successful completion of this course participants earn 2 education points towards their CCE recertification.
Dr. Frederick C. Scherr is a Professor Emeritus of Finance at the College of Business and Economics at West Virginia University, where he taught for 30 years and won both the College’s Outstanding Teacher and Outstanding Researcher awards. He is the author of more than 30 research articles, four textbooks, and many articles in professional publications such as The Credit and Financial Management Review, The Credit Manager, and Business Credit. He has done extensive work in adult education for the National Association of Credit Management, including teaching at the Graduate School of Credit and Financial Management, and for private corporations.
The major topic in this module is making credit decisions. The reading assignment is chapters 1, 2, and 3 in Making Sound Credit Policy Decisions by Frederick C. Scherr. (This text is included in your registration.) Topics covered include: credit policy and the goals of the firm; costs that are affected by credit decisions; methods for evaluating the costs and benefits of credit decisions; determinants of credit investigation policy; credit-granting decisions in a marginal cost framework; how to estimate credit-based costs; the effects of uncertainty on credit-granting decisions; and factors that determine whether credit-granting should be based on long-term or short-term creditworthiness. The case problem for this module is The Case of the Meritorious Molder, a case in credit-granting decisions, which is at the end of Chapter 3.
The major topic for this module is the analysis of terms of sale. The reading assignment is chapters 4, 6, and 7 in Making Sound Credit Policy Decisions by Frederick C. Scherr. (This text is included in your registration.) Topics covered include: the effects of credit enhancements of the costs of credit-granting; taking credit cards as a collection strategy; basics of negotiating the conditions of credit-granting; expert and statistical scoring systems for credit-granting; legal aspects of terms of sale decisions; the costs and benefits of changing terms of sale; electronic payments; and cash discounts as a collection strategy. The case problem for this module is The Case of the Tenuous Terms, a case in determining terms of sale, which is at the end of Chapter 7.
The major topic for this module is monitoring the outcomes of credit policy. The reading assignment is chapters 5, 9, and 8 in Making Sound Credit Policy Decisions by Frederick C. Scherr. (This text is included in your registration.) Topics covered include: information credit limits and credit investigation; risk credit limits and their application; outsourcing credit functions; credit management for the small firm; measurement error in monitoring credit outcomes; accurately measuring discount expense, days to pay, and bad debt expense; budgeting credit costs; and variance analysis of accounts receivable balances. The case problem for this module is The Case of the Dubious DSO, a case in monitoring credit policy outcomes, which is at the end of Chapter 8.
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