Policies & Procedures For Credit Limit Extension
The followings are the factors (5 Cs) which required you to conduct survey & analysis upon the customer (who had appealed for extension of his/her credit limit) based on or in accordance with what is generally done or executed. For instance, performing thorough appraisal and evaluation on Five Cs of the customers, on top of that the customer must have satisfied its credit rating perceived by the company.
You are obligated to undertake full liability and assurance or your affirmation that you have conducted genuine appraisal and evaluation based on prerequisites in order to extent the customer credit limits, moreover you will be accountable and prosecuted accordingly if the customer doesn’t meet his/her promise thus you are suggested to be extra cautious and meticulous while conducting the background check and so on.
Customer Credit Standards
When determining customer creditworthiness and the limit through credit analysis, you are strongly advised to evaluate on Five C’s credit selection technique which involve the followings, the main purpose of this in-depth credit analysis is because of the time and expenses involved if encountered with unsolicited default from customers
· Character: The applicant’s record of meeting past obligations
· Capacity: The applicant’s ability to repay the request credit as judged in terms of financial statement analysis focused on cash flows available to repay debt obligations
· Capital: The applicant debt relative to equity
· Collateral: The amount of assets the applicant has available for use in securing the credit. The larger the amount of available assets, the greater the chance the firm will recover funds if the applicants default
· Conditions: Current general and industry -specific economic condition and any unique conditions surrounding a specific transaction
· Additionally, other aspect of customer can contribute significantly on determining the credit standard such as their percentages of purchasing and reselling our products as well as their efforts in increasing our market share.
· Once you determined the plausible standard, you are required to inform and seek for my approval on decided credit limit.
Shwe Yin Mar Co., Ltd.
OBJECT: Undertaken for Customer Credit Limit Extension
This letter of undertaking is pursuant to entreaty for extension of the credit limit for customer (name/shop/address/contact), brief description of the requested extension is elucidated as below,
I hereby assure and pledge that I have conducted and evaluated in accordance with the policies, guidelines and the information given are thoroughly validated.
As per accordance with the company’s policy, I am aware of the fact that I will be held accountable for any conflicts arising from this undertaking due to my negligence in corroborating relevant information and not performing in compliance with the proper procedures.
Therefore, I undertake full liability of my assurance or affirmation that the I have conducted genuine appraisal and meticulous evaluation as per requirement hence I give my sincere consent to company to prosecute or indict me if any misinformation were given.