Credit Sales Risk Identification and Control Process-World Credit Organization
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
4.1.3 (for internal risks) credit sales risk control process
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)