What are credit risks and costs as compare to cash sales?

a)Contract default risk – the seller not only loses goods and cash from sales, but has to incur collection expenses as well.

b)Opportunitycost – your restricted cash on credit shall not be invested or utilized for other business activities.

c)Guarantee or mortgage risk – you have to incur cost to verify the value of the guarantee or the collateral from the buyer and take risk of their validity.

d)Cost to maintain a credit management function;

e)Cost relating to training provided to credit management department;

f)Time cost – purchasing power of same amount shall decrease;