Credit Management

Credit management in foreign trade refers to the full-process management by which a company evaluates customer credit, grants credit limits, monitors accounts, and collects overdue payments to reduce the risk of sales on credit. Its core includes customer credit investigation (such as through Dun & Bradstreet reports), setting credit limits, negotiating payment terms (such as OA, D/P, L/C), accounts receivable monitoring, and overdue collection. It is commonly used in export transactions that adopt credit sales methods (such as T/T after telegraphic transfer, D/A documents against acceptance), especially when trading with new customers or in high-risk regions. Note: it is necessary to balance sales growth and risk control, avoid excessive credit granting that leads to bad debts; customer credit ratings should be updated regularly, and export credit insurance or factoring should be used to transfer risk. The difference from 'risk management' is that credit management focuses more on the counterparty's ability and willingness to pay, while risk management covers broader areas such as exchange rates and transportation. Compared with 'accounts receivable management,' credit management places more emphasis on pre-transaction assessment and credit decision-making, rather than only post-event collection.