This article will show that trade credit can in fact be a long-term consideration and that credit extension/demand and credit management can be used as a strategic device for competing and adding value to the firm. The authors will examine different ways companies can use trade credit management as a device that plays a significant role in strategic decision making and in their overall efficiency, profitability and long-term survival. Furthermore, the authors will explore ways in which companies can use trade credit pro-actively to deal with problems such as late payment and default, and then discuss the importance of credit policy formulation which provides a framework and a mechanism for consistent and effective credit management. Firms may be able to discriminate/distinguish themselv...
An important channel through which largely unregulated hedge funds interact with regulated institutions is prime brokerage relationships. Central to these relationships is the extension of credit to hedge funds, which exposes banks to counterparty credit risk. Counterparty credit risk management (CCRM) practices, used to assess credit risk and limit counterparty exposure, are banks' first line of defense against market disruptions with potential systemic consequences. Hedge funds' unrestricted trading strategies, liberal use of leverage, opacity to outsiders, and convex compensation structure make CCRM more difficult, as they exacerbate potential market failures. While past market failures suggest that CCRM is not perfect, it remains the best initial safeguard against systemic risk; thu...
Though North's discussion at the FCIB's 20th Annual Global Conference was eye-popping, and even humorous in considering how worthless currencies became under the burden of hyperinflation, it was nonetheless poignant as the US and Europe emerge from the shroud of recession. The conference began with the keynote presentation, "Global Crises, Global Opportunities," a worldwide economic outlook for 2009-2010 by Daniel Christman, retired Lieutenant General and senior counselor, international affairs, US Chamber of Commerce. Russell D'Souza, director, Global Credit Risk Management, Hanesbrands, Inc facilitated the session "Establishing all International Credit Policy," which provided instruction on how such a policy could ensure effective and timely collection of receivables. Applying the les...
WASHINGTON, April 30 /PRNewswire-FirstCall/ -- Fannie Mae (NYSE: FNM) today announced new standards for the purchase and securitization of adjustable-rate mortgage (ARM) products. The company is changing eligibility criteria to protect consumers from potentially dramatic payment increases and to help ensure that borrowers who hold these types of mortgages can sustain them beyond the initial interest rate period. Our goal is to make sure consumers can sustain their mortgages and remain in their homes over the long term, while helping our lender partners offer a range of mortgage products for qualified borrowers," said Marianne Sullivan, Senior Vice President of Single Family Credit Policy and Risk Management at Fannie Mae. "These policy changes reflect our intention to continue providin...
The second of the two-part series on trade credit and the late payment problem is presented. This article reports on different UK practices and highlights those that contribute to he aggravation of the problem/phenomenon. It also discusses the importance of not only credit policy formulation which provides a framework for credit decision making and a mechanism for consistent and effective credit management but also credit practices that can reduce late payment problems.
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