The credit period of a bank loan, also known as the credit period, refers to the time interval between the purchase of goods and the payment of payment by a company. There is a certain dependence between the sales volume of an enterprise's products and the credit period. Determining the credit period is an important part of credit management. The purpose of determining the credit period is to allow the enterprise to obtain more profits.

The credit period affects the profitability of the enterprise in two ways:

1. The credit period affects the cost of the enterprise. The longer the credit period, the greater the cost the enterprise will bear. .

2. Second, the credit period affects the competitiveness of enterprises in the market. The longer the credit period granted by an enterprise, the lower the price paid by customers when purchasing goods, and the more competitive the products will be in the market. The more power a company has, the greater its market share will be.

Extended information:

1. Industry practices

In actual work, the credit period should be determined through mathematical methods based on reference to industry practices. . For example, the marginal analysis method or the net present value flow method can be used to more scientifically determine the length of credit period that an enterprise will grant to its customers.

2. Market competition pressure

The credit period is too long, which will have a negative impact on the company. However, if the credit period provided by competitors is long, in order to win the competition, the company will have to provide longer credit periods. Long credit period. Generally speaking, the more intense the competition in the industry where a credit sales company is located, the longer the credit period it will grant to its customers.

3. The time when the creditee owns the goods

In the market, there are two types of credit sales customers, one is the end user of the goods, and the other is the wholesaler. The credit period cannot exceed the time when the credit sales customer consumes the goods themselves, and it is not allowed to extend the credit period after the goods are sold. Under normal circumstances, the credit period should be shorter than the above period, otherwise the enterprise can choose other customers for sales to obtain faster capital turnover.

Baidu Encyclopedia-Credit Period