Credit management within GO plc and its financial implications : a case study

Abstract

Purpose: Despite all the ever increasing financial distress, credit and its management is still a very much neglected area, with very few literature publications. This study is thus intended to counteract this deficiency and to create more awareness about the subject and its significance. The research sets out the risks as well as the merits of credit, and ultimately provides a detailed description of what effective credit management entails. As the title implies, the study also analyses GO's credit function, of which policies and practices are compared to those implemented by the local business community. Design In order to achieve the aforementioned objectives, a semi-structured interview was conducted with the senior credit controller manager of GO plc, who explained thoroughly the policies and procedures currently implemented as part of the company's credit function. Another semi-structured interview was held with the Director General of the Malta Association of Credit Management (MACM) so as to obtain an overview of the general local credit management practices. Findings The research shows that credit might not only be utilised as a selling aid tool, but it could also serve as a means of obtaining a competitive advantage. The study ascertains that a strong culture and consciousness of risk has been infused throughout organisations. A case in point is GO plc, whereby its enhanced recognition of credit risks, has resulted in the allocation of more time and resources towards credit management. However, despite increased awareness, there are still a number of companies which fail to actively engage in effective credit management. Value It is sincerely hoped that this study will induce more businesses to take a more-committed, formal approach towards credit manage Lastly, it could easily serve as guidelines to anyone who wishes to actively engage in credit management.