Based On The Product Life Cycle Of Corporate Credit Policy Choice

The deterioration of credit system has become serious hindrance for thesustainable and healthy growth of China's economy. An increasing numberof companies have realized the importance to improve the corporate creditmanagement. As the core of corporate credit management, the establishmentand implement of credit policy is one of the important financial strategiesfor companies. In practice, many companies with good manufacturing andsales status fall into financial crisis because of inappropriate use of accountsale and credit policies. The establishment of appropriate credit policies canenhance the sales and market share of the products, minimize operating risks,and rationalize cash flow for corporations. As components of the socialeconomy, the decisions of companies are inevitably affected by cyclicalfactors. Therefore, when making decisions on credit policy, they need totake cyclical economic factors into consideration. The cyclical factors thatinfluence corporate credit policy include product life cycle, seasonal factorsand business cycles. The author analyzes and discusses how to scientificallyestablish appropriate credit policies at different stages of product life cycle.This paper is consisted of five chapters. The preface introduces thebackground, objective and limitation of the research. Chapter 1 reviews theexisting theories on product life cycle and analyzes the operation risks andcash flow status for corporation at different stages of product life cycle.Chapter 2 analyzes the influence of cyclical factors on credit management.Chapter 3 proposes the methods to make choices of credit policies atdifferent stages of product life cycle. Chapter 4 uses case studies of choicesof credit policies to illustrate the effectiveness and importance of makingcredit choices according to different stages of product life cycle.