Research On The Credit Line Of Reasonable Receivables Of Enterprises

Credit rationing theory points out that the borrower and the lender have the tendency of asymmetry of information before forming the loan relationship,which can lead to "adverse selection" and "moral hazard".To avoid this phenomenon,The lender should control the borrower's credit line within a reasonable range,rather than fully meet the borrower's application.The credit rationing theory gives the enlightenment of this article that it is necessary to set the credit line of the borrower in the case of information asymmetry.Facing the drastic competition,credit sale has been adopted widely among the enterprises.But,most of our enterprises have weak credit risk controlling awareness.Without considering their own financial strength,they offer an unreasonable credit line for their customer.With the expansion of the scale of credit sales,arrears happen frequently between enterprises,which brings about a large number of overdue accounts receivable,and resulting in tense cash flow,even financial crisis.The credit line is the amount that the customer can take up the accounts receivable of the enterprise when the enterprise carries out the credit sale,according to financial strength of the enterprise and the solvency of the customer.Reasonable credit line can effectively control the size of accounts receivable,prevent credit risk,and improve the quality of corporate profits.This article,from the enterprise's perspective,discusses the way of setting up a reasonable credit line for a customer.This paper summarizes the relevant literatures at home and abroad,and finds that the method of setting credit lines for customers is mainly based on the customer's credit analysis.Based on the analysis of the factors influencing the credit quota of the enterprise,it is pointed out that the reasonable credit line of the enterprise should not only consider the customer credit limit according to the solvency of the customer,but also consider the enterprise credit limit according to its own financial strength.And then,under the guidance of the product life cycle theory,it sets up the specific customer's reasonable credit line according to the enterprise credit limit and the customer credit limit.And finally,we use this model to analysis one case.