Credit Analysis
Involves  evaluating capacity of customers requiring credit period. Criteria of measuring creditworthiness of prospective customers :
1)     Character of customer
2)     Capacity to repay
3)     Capital / financial  position of customer
4)     Collateral Security provided by customer
5)     Conditions (Economic, Social , competition etc.)
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Opportunity Cost
Opportunity/profit foregone(givenup) as a result of blocking the money in Debtors instead of investing it in other manner.
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Credit Policy Variables
Determining   Credit Policy involves  determining the following variables:
a)     Credit evaluation and Credit Rating  of customers
b)Â Â Â Â Costs associated with accounts receivables- Collection cost , Capital cost , Delinquency cost and Default cost .
c)     Collection methods of receivables
d)    Control of Receivables through – Days Sales Outstanding ,Ageing Schedule and ABC Analysis
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