Credit Control — A Survey

The success of a credit system, in terms of both effectiveness and cost, is largely determined by policy established within the company. Too conservative a policy will entail high opportunity cost through loss of business, but too liberal a policy results in the cost of tying up funds in debtors and the increased possibility of bad debts. A survey investigating building merchants' practices in Wales (1984), conducted by questionnaire, reflects some variety in approaching the provision of trade credit, but a relatively high degree of uniformity and lack of sophistication in monitoring systems. Producing statistical indicators of performance from a computer, ceasing to grant credit, or using external services such as credit insurance and factoring, are options which do not seem to have been fully explored.