What is Credit Management?

Credit management encompasses the strategies and processes businesses use to manage their receivables (money owed to them by customers) and payables (money they owe to suppliers). Effective credit management aims to minimize credit risk, optimize cash flow, and maintain healthy financial relationships with both customers and suppliers. This involves assessing creditworthiness of customers, setting credit limits and payment terms, invoicing accurately and promptly, diligently collecting outstanding payments, and managing debt recovery when necessary. On the payables side, it includes negotiating favorable payment terms, managing invoice approvals, and making timely payments to maintain good supplier relationships.