CCM Credit Policy & Procedures Flashcards
6 cards from real CCM practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 6 CCM Credit Policy & Procedures flashcards as text
Which document is used to formally transfer the right to collect a receivable to a third party?
Answer: Assignment of accounts receivable
An assignment of accounts receivable legally transfers the right to collect the debt to a lender or collection agency.
A credit manager reviewing an accounts receivable aging report is primarily assessing:
Answer: The age and collectability of outstanding invoices
An AR aging report categorizes outstanding invoices by how long they've been unpaid, enabling targeted collection efforts.
What is the purpose of a credit review cycle for existing customers?
Answer: To reassess creditworthiness and adjust limits based on current performance
Periodic credit reviews ensure existing limits reflect the customer's current financial condition and payment behavior.
When a customer disputes an invoice, the BEST first step for the credit department is:
Answer: Investigate the dispute and work with the customer to resolve it promptly
Prompt investigation and resolution of disputes protects the customer relationship and prevents legitimate disputes from aging into bad debt.
A credit department's deduction management process is designed to:
Answer: Track, investigate, and resolve unauthorized short payments
Deduction management identifies, categorizes, and resolves short payments to recover unauthorized deductions and reduce write-offs.
Which of the following is a key indicator that a credit policy needs to be tightened?
Answer: Bad debt write-offs are increasing and DSO is rising
Rising bad debt write-offs and increasing DSO signal that credit standards may be too loose and policy tightening is warranted.