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CREDIT
CONTENT
- Meaning of Credit
- Basis for Credit Sales
- Sources of Credit
- Functions of Credit to Retailer, Wholesaler
- Credit Instruments
- Advantages and Disadvantages of Credit Sales
Meaning of Credit
Credit is the ability of a person, individual or corporate entity to buy and enjoy goods and services and pay at a future date usually with interest. The credit worthiness of the buyer must be taken into consideration before granting credit so that it will not lead to bad debt. There should also be contractual agreement between the seller and the buyer.
Basis for Credit Sales
Credit can be granted based on the following:
- The income of the buyer
- Sources of payment
- Integrity of the buyer
- Availability of guarantors
- Present employment
- Time of payment.
EVALUATION
- Explain the term credit
Sources of Types of Credit
Sources of credit are as follows:
(i) Loans:
These are formal credits granted to a customer repayable at an agreed date, place and condition.
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ClassHall Instructor
Halima Ahmadu