Steps in Credit Appraisal
1) Customer Evaluation—Character+Capacity+Capital+Collateral Security+Conditions (economic)
2) Financial Stmts. of Customers
3) Bank references
4) Trade References
5) Credit Bureaus
6) Bank & Third Party Guarantees
7) Field Visits
Collection Methods
a) Centralised Collection System
b) Decentralised Collection System
c) Post dated cheques
d) Pay order/bank draft
e) Bills of exchange
f) Lock Box System
g) Drop –box System
h) Collection Staff
i) Debt Collector
j) Del Credere Agent— collection of debts + assumes risk of bad debts
gets additional commission.
k) Concentration Banking
l) Factoring
5 Comments