Credit Sales Risk Identification and Control Process-World Credit Organization

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ICE8000 credit knowledge column
  • 1. "Introduction to ICE8000 Credit Knowledge"
  • 2. "Building an Integrity Unit——ICE8000 Integrity Management"
  • 3. "ICE8000 Credit Investigation, Analysis, Rating"

    • 4.1 Credit sales risk identification and control process

    4.1.1 Credit sales risk identification and preventive measures table

    Sources of risk

    Subjective will

    Number

    Risk Description

    Precautions

    External risk (W)

    Risk of subjective dishonesty

    (Z)

    WZ1

    The customer signed the contract with a false identity, and then defrauded the goods

    Check the authenticity of the customer's identity and honesty. The specific measures are: require customers to become members of the World Credit Organization (WCO) and check their credit files.

    WZ2

    The customer intentionally created a contract dispute and used the contract dispute to default on the payment

    WZ3

    The customer has the ability to pay, but maliciously defaults on the payment on the grounds of inability to pay

    Objective Risk of Distrust

    (K)

    WK1

    There are objective flaws in the contract, which make its enforcement unfavorable to the creditor

    Review the various terms of the contract, and clarify important terms such as delivery and inspection terms and payment terms.

    WK2

    Bad debt losses due to customer financial crisis or customer bankruptcy

    Review the customer's performance ability and financial risk. The specific measures are: require customers to provide credit rating reports issued by ICE8000 credit agencies.

    WK3

    Bad debt losses caused by objectively disputed contracts due to judicial fairness and/or judicial efficiency

    Add CS clause or/and ICE8000 arbitration clause to the contract or require customers to become a member of the World Credit Organization (WCO), and use ICE8000 dispute resolution mechanism to handle disputes

    Internal Risk (N)

    Risk of subjective dishonesty

    (Z)

    NZ1

    Credit sales risk caused by malicious collusion between employees and customers or credit sales risk caused by insufficient sense of responsibility of employees

    The staff of the credit management department, supply department, and financial department are required to become members of the World Credit Organization (WCO), and formulate reward and punishment measures. At the same time, employees can be required to take an oath of conscience for specific matters.

    NZ2

    Credit sales risk caused by insufficient working ability of employees

    Require employees of the credit department to have international credit qualifications, and provide training for relevant personnel

    NZ3

    The risk of credit sales caused by the sales department's one-sided pursuit of sales performance

    The credit department is responsible for the credit approval

    Objective Risk of Distrust

    (K)

    NK1

    The risk of out-of-control credit sales caused by the lack or oversimplification of the credit sales system

    Establish credit management system

    NK2

    The risk of inefficiency caused by the overly complicated credit sales system

    Relevant departments jointly evaluate and update the credit sales management system

    NK3

    The risk of breaking the enterprise's capital chain caused by excessive credit sales

    Determine the total credit limit

    4.1.2 (for external risks) credit sales risk control flow chart

    Credit Sales Risk Control Flowchart

    4.1.3 (for internal risks) credit sales risk control process

    Credit Sales Risk Control Flowchart II

    The above content is excerpted from "Building an Integrity Unit - ICE8000 Integrity Management" (written by Fang Bangjian, free to use, but please indicate the source)