Monday, November 10, 2008


The Management of Creditors & Short Term Finance.
The management of creditors involves:
  • Attempting to obtain satisfactory credit from suppliers.
  • Attempting to ectend credit during periods of cash shortage.
  • Maintaining good relations with regular & important suppliers.
If a supplier offers a discount for the early payment of debts,the evaluation of the decision whether or not to accept the discount is similar to the evaluation of the decision whether or not to offer a discount one problum is the mirror image of the other.The methods of evaluation the offer of a discount to customers were described earlier.
Sources Of Short-Term Finance.
Taking trade credit from suppliers is one way in which a company can obtain some short-term finance. In addition to its longer term sources.Short-term finance can also be obtained:
  • With a bank overdraft.
  • By raising finance from a bank or other organization the security of trade debtors.For example : through factoring or invoice discounting ( both discribed earlier in this post).
  • For larger companies by issuing short-term debt instruments,such as commercial paper.

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