Trade credit is a company’s ability to obtain goods and services from a supplier with the promise to pay in accordance with agreed terms. It also includes securing bank loans and protecting business credit for continued growth. Sometimes called trade credit or trade lending, trade credit has to do with a company’s ability to obtain […]
In many US states, it is illegal to require a credit card when paying by check. Merchants who ignore the law can be fined or face class action lawsuits. While some states allow merchants to ask for a credit card, it is generally not allowed to write credit card information on a check. Showing a […]
A Credit Default Swap (CDS) transfers financial risk from one party to another. The buyer pays the seller’s premiums in exchange for the seller’s assumption of risk. However, the unregulated market for credit default swaps led to problems, including the inability of some sellers to cover their credit swaps. A CDS (Credit Default Swap) is […]
A credit card payment processor allows businesses to accept credit card payments and collect money for transactions. Merchant account providers and third-party merchants are two options, both requiring fees. Merchant accounts allow businesses to process payments, while third-party processors use their own accounts and deduct fees before transferring funds to the business owner. A credit […]
A credit crunch is when there is a decrease in the availability of loans due to changes in bank lending practices, causing higher interest rates and impacting the global economy. The 2007 US subprime mortgage crisis is an example. It can take years for economic conditions to improve, leading to insolvency and bankruptcy for companies […]
Credit risk management involves strategies to reduce the risk of default on loans, such as purchasing credit insurance, diversifying loans, reducing credit limits, and charging fees. Diversifying credit is safer than investing in a single area. Financial institutions employ risk management specialists to design and monitor credit risk protection plans. When financial institutions, investors, or […]
Trade credit insurance protects policyholders from losses due to buyer default. It also attracts investors, expands customer base, and lowers bad debt reserves. Though it can be costly, it offers peace of mind and financial protection. Trade credit insurance is a type of trade insurance coverage that helps protect the policyholder from losses incurred when […]
Tax credits provide dollar-for-dollar tax relief and are used to compensate for inequalities or encourage certain behaviors. Fuel tax credits are designed to encourage the purchase of fuel-efficient vehicles and investment in alternative fuels. They are subject to legislative revisions and vary by country and state. Tax credits are tax reductions designed by legislators and […]
An unsecured line of credit allows borrowing without collateral, but requires a high credit rating and may have lower limits and higher interest rates than secured lines. It is useful for short-term projects and requires consideration of the company’s needs and costs. A line of credit is an agreement between a bank or financial institution […]
International credit insurance protects companies conducting financial transactions with foreign entities. Premiums are higher due to increased risk factors, such as political instability and currency fluctuations. Policies are tailored to the specific needs of the parties involved and are subject to renewal and reassessment. Private insurers now provide political risk coverage, which was previously only […]
A credit note is a financial instrument issued by a government or as part of a business transaction, used as currency to pay bills or carry out financial transactions. It can be viewed as a document used in place of currency in a transaction, with the expectation that it will be redeemed for cash in […]
A business line of credit is a loan agreement between a business and a financial institution, often unsecured, that allows the borrower to withdraw up to a maximum amount and only pay interest on the amount borrowed. It can be used for various purposes, but fees and interest rates can add to the total cost. […]
A good credit score is important for favorable credit or loan terms, with FICO being the main credit score repository. Scores range from 300 to 850, with scores above 720 considered good. Payment history, amount owed, credit history duration, new credit, and types of credit used make up the score. Lenders use credit scores to […]
A bad debt reserve is a way to offset accumulated bad debt caused by unpaid customer invoices. It can be used in scenarios such as factoring, bankruptcy, and small businesses to minimize the negative impact on the company’s functionality. As a way of minimizing the impact of bad debt on a company’s functionality, the bad […]
A credit card terminal authenticates credit cards for payment. It protects retailers from invalid payments and comes in various forms, including keypad and wireless models. Data is sent to a verification center for approval, and some models allow for automatic data transmission. Web-based services also exist. A credit card terminal is a device that businesspeople […]
Trade credit allows customers to order goods and services without paying in advance. Suppliers may offer revolving credit or specific payment terms. Timely payments can help establish business credit and attract lenders. Commercial credit is also available to individuals. Trade credits are open accounts extended to a customer by a supplier. Trade credit makes it […]
Secured business credit cards can help startups build credit, but there are different types of guarantees. Business owners may be personally liable for repayment, but can also obtain prepaid or protected cards. Guaranteed cards may have higher fees and interest rates. Obtaining a secured business credit card can be the first step to building credit […]
It’s important to know how to contact credit bureaus to obtain a copy of your credit report and correct any errors. Get contact information directly from the agencies or your local bank, and be cautious of copycat websites that may charge hidden fees. Many people understand that it’s a good idea to secure a copy […]
The Fair Credit Billing Act protects US consumers from unfair billing practices by creditors for open accounts. Consumers have the right to dispute errors and are not responsible for unauthorized charges or items not received. Disputes must be made in writing within 60 days, and creditors must investigate and resolve the issue within 90 days. […]
Renting an apartment is a big commitment for both the landlord and the tenant. Landlords should consider an applicant’s credit history and ability to care for the property. It is recommended that landlords with limited financial resources be cautious when renting to applicants with credit risk. Stricter approval guidelines may be financially prudent. Making a […]
