THE USE OF COMMERCIAL CREDIT POLICY TO INCREASE THE COMPANY VALUE
THE USE OF COMMERCIAL CREDIT POLICY TO INCREASE THE COMPANY VALUE

Summary/Abstract: The objective of sustainable increase in company value involves as a major component the financial management of account receivables, as it represents the main interface of the company with the most important part of the stakeholders‘ community. In this context, the account receivables have to be treated as a continuous short term investment the company makes in order to secure a stable and growing portfolio of customers. In our article we are trying to set the commercial credit using an analytical framework that deals with quantity, prices, discounts, instead of using overall measures, such as sales turnover and profit. This approach allows the financial and sales managers to have a more efficient intervention upon the variables of the commercial credit policy, both in the ex-ante, setting phase of the commercial credit, as well as in the ex-post phase of analysis and correction of the results. Also, we have tried to connect the commercial credit policy with the need for a more efficient use of the existing production capacity, given the obvious cost and price advantages that a company gets when it increases the quantity of products sold. Our paperwork is a theoretical approach that follows to offer a model for configuring the commercial credit policy by the mean of a qualitative approach that uses indexes, weights and the correlation between the evolution of quantity and the evolution of prices.

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