Credit management : a study of the new car importation industry in Malta

Abstract

It is essential for a business to be paid for its sales. Therefore, it makes sense that a business should be geared not only towards selling but also to get paid for its sales. Notwithstanding the size of a business, the importance of an effective and capable credit management function is undebatable.

The dissertation looks into the credit management practices of a sample of Maltese new car importers. Various aspects of credit management are dealt with, mainly credit policy, the assessment of clients’ creditworthiness and the granting of credit, the chasing of debtors, credit insurance, bad debt, and the charging of interest. Information on these aspects, obtained through structured interviews, is used to give a picture of the effectiveness of the Maltese new car importer’s credit management practices, taking into consideration the theoretical aspects of the subject.

Are new car importers concerned with their customers’ creditworthiness? What are the major causes of bad debt? Is serious action being taken against late payers? These are a few of questions which are put forward in this dissertation. On the basis of these and similar questions, a number of recommendations are to be found at the end of the study.