A Study On Export Corporation Trade Credit Management

Credit comes from different payment date of the two trade parties. Credit sale (such as account sale). Account sale cause accounts receivables, which is the obligation to payment of the buyers, therefore the two parties become debtor and creditor. The market is enlarged through credit sale, but the uncertainty comes out at the same time, which make the creditor face the possible exposure of credit risk. Today, trade credit management seems as the sole of the corporation in west countries, corporations without integrate and efficient trade credit management lack protect to credit risk, are short of competence, then will be washed out of the market. Credit management goes through each part of the corporation business, is relation to people in every department or level, is one of the core contents in today's corporation management.The trade customer of export corporations is oversea, the information asymmetry is high, the content of export credit risk is more complex than the domestic ones, so credit management is more important for export corporations. But Chinese export corporations all along lack of proper recognition of credit management, have serious defects in their credit management, such as the sales department and the finance department value only themselves, nobody answer for accounts receivables. There isn't any credit management system or measures in most Chinese export corporations, accounts receivables is just managed as a common account. This kind of management makes corporations have a large empty in credit risk control, facing huge credit risk exposure all the time, remain lots of aged debts and bad debts, short of current capital, at last become bankrupt.Trade credit management in this article is focus in the management of the customer credit, including making credit management procedures, leading and harmonizing the work of each department, collecting and evaluating customer information, deciding credit policy and credit limits, protecting creditor rights,collecting accounts receivables and so on, in order to make sure the collection security and in time. Trade credit management technique can be divided in to risk management technique and cost management technique. This article discusses each of the two techniques, gives reference to the export corporations in managing trade credit.The article contains five parts:Part 1 Introduction. This part explains the connotation of each concept in export corporation trade credit management, analyzes the reality of Chinese export corporation's trade credit management and the world market situation, discusses the importance of Chinese export corporations to strengthen credit management.Part 2 The economic theoretic basic of trade credit management. This part introduces the development of trade credit management theory and practice both in China and overseas, summaries the objective of export corporation trade credit management, discuss the economic theoretic basic of trade credit management.Part 3 Export corporation trade credit risk assessment and management. This part analyzes risk management technique from the risk-return point of view, explains credit risk models, gives main measures of export credit risk management.Part 4 Export corporation trade credit cost analysis and management. This part follows cost-return principle, analyzes the factors of trade credit cost and their variance trend, bring forward the main measures in export corporation credit cost control.Part 5 Measures for export corporations to transfer export credit risk. This part analyzes and compares the two main measures: export credit insurance and export factoring, gives advice to export corporations to choosing.