Effects of Late or Non-payments/Assessment

Unit 3.3- Effects of Late or Non-payments

Introduction | Tenets of Risk Assessment | Risk and Reward | "Eight C's" | 5 "C's" | 3 "C's" | Applying the "C's" | Impact of Nonpayment | Identifying Costs | Bad Debt Value | Interest | Cost and Capital | Administrative | Summary | Resources | Activities | Assessment Go to Unit 3.1 | Unit 3.2 | Unit 3.3 | Unit 3.4 | Unit 3.5 Return to International Finance Module 3: Commerical Risk

Assessment

1. The tenets (principles) of risk assessment rely on

a. the customer for the most information.

b. gathering as many facts on the customer as possible.

c. your sales department for key data.

d. having financial statements for all customers.

2. Recognizing the “risk/reward” of international credit means

a. reducing outstanding receivables as much as possible.

b. having flexible credit policies for international customers.

c. knowing and apply the components of the “costs” of credit.

d. getting the customer to agree on the “shortest” terms possible.

3. The “Eight C's" of credit risk evaluation for the global seller provide

a. the sales department with necessary information.

b. assistance to a buyer in improving the relationship with a seller.

c. a simple checklist for the customers to complete.

d. research on the customer and the international environment.

4. The “risks and rewards” element of international credit differs from domestic or “in-country” credit decisions because

a. there is normally more profit available in international sales transactions.

b. more factors impact both risk and reward in the international scene.

c. there is normally more pressure from sales to sell internationally.

d. financial statements on international customers are, by nature, more comprehensive than those of domestic customers.

(Correct answers: 1=b, 2=c, 3=d, 4=b.)