Credit Sales Research Articles

A multi-dimensional forward selection method for firms’ credit sale

In this paper, we propose a framework of the selection method for firms’ credit sale, including the concepts of multiple credit sale dimension, a credit sale space, imperfect identical credit sale status and ε -identical credit sale status. In addition, a forward selection model is established for credit sale of retail traders by optimization techniques. Finally, an example is illustrated to show the analytical potential of the proposed method in a real-life application.

On the Role of Receivables in Managing Salesforce Incentives

ABSTRACT Despite the obvious problems associated with collections, firms routinely sell on credit. Conventional wisdom suggests offering credit is a necessary evil when dealing with insistent cash-constrained customers. This paper provides a more positive view of trade credit. We find that offering credit can enhance the efficiency of incentive contracts with sales personnel. In effect, with a credit sale, a client gets a second chance to generate enough cash. The client's second chance gives the sales agent another opportunity to demonstrate his past diligence to the firm. Moreover, to limit the risk associated with the fact that even a high-quality client may fail to eventually come up with funds, the firm relies on the accrual system. In particular, the agent's (discretionary and early) choice of the bad debt allowance conveys his private information regarding client quality; the payments associated with subsequent collections/default keep such reporting in check.

How Community Institutions Create Economic Advantage: Jewish Diamond Merchants in New York

This article argues that Jewish merchants have historically dominated the diamond industry because of their ability to reliably implement diamond credit sales. Success in the industry requires enforcing executory agreements that are beyond the reach of public courts, and Jewish diamond merchants enforce such contracts with a reputation mechanism supported by a dis tinctive set of industry, family, and community institutions. An industry arbitration system publicizes promises that are not kept. Intergenerational legacies induce merchants to deal honestly through their very last trans action, so that their children may inherit valuable livelihoods. And ultra-Orthodox Jews, for whom participation in their communities is paramount, provide important value-added services to the industry without posing the threat of theft and flight.

How Communities Create Economic Advantage: Jewish Diamond Merchants in New York

This article argues that Jewish merchants have historically dominated the diamond industry because of their ability to reliably implement diamond credit sales. Success in the industry requires enforcing executory agreements that are beyond the reach of public courts, and Jewish diamond merchants enforce such contracts with a reputation mechanism supported by a distinctive set of industry, family, and community institutions. An industry arbitration system publicizes promises that are not kept. Intergenerational legacies induce merchants to deal honestly through their very last transaction, so that their children may inherit valuable livelihoods. And ultra-Orthodox Jews, for whom participation in their communities is paramount, provide important value-added services to the industry without posing the threat of theft and flight.

Integrated Decision Model for Credit Product Outsourcing

The European banking landscape seems to be evolving from a highly vertically integrated banking landscape into a value network of specialized banks. This can also be seen in the credit product industry where consumer credit specialists take over portfolios from other banks. While decision models for IS, operations and production outsourcing are discussed in the literature, we lack a model for credit product outsourcing which reflects the change of risk capital as discussed in the literature about credit sales. In combining these two literature strands, we develop a model to determine whether it is beneficial to internally produce or externally source a credit product.

Comments on “Regulation of the Rent-to-Own Industry: Implications of the Wisconsin Settlement with Rent-A-Center”

This commentary offers an industry perspective on several of Hastak's (2004) premises pertaining to the future of the rent-to-own industry in Wisconsin. The commentary focuses on the legal characterization of rent-to-own transactions in Wisconsin as credit sales and practical issues that such a characterization pose for the industry. The commentary also offers an explanation of why Rent-A-Center adopted its new business format in the state.

Market Price of Salam on the Date of Delivery : Is it Permissible ?

English version is available at: https://ssrn.com/abstract=3093769 Arabic Abstract: السلم ضرب من البيع الآجل ، يتم فيه تعجيل الثمن وتأجيل المبيع ، وهو جائز بإجماع الفقهاء إذا تم الاتفاق على السعر في العقد . لكن بعض الفقهاء أجازوا الإحالة في العقد على سعر السوق يوم العقد ، كما أجاز بعضهم الإحالة على سعر السوق يوم التسليم، ومنهم من رأى أن من الممكن الاتفاق على السعر الأخير مطروحا منه مبلغ معلوم ، أو نسبة معلومة . فإذا دفعت الآن 100 ، وحصلت بعد سنة على سلعة يزيد ثمنها في السوق على 100 بمقدار 10 ، كانت هذه الزيادة من باب ربا النسيئة ، لأن العملية صارت أشبه بالقرض منها بالبيع ، فالبيع هنا خال من المخاطرة ، وربما يعيد المشتري بيع السلعة إلى المصرف ليحصل على 110 . فمع أن الزيادة في الثمن تجوز عند جمهور الفقهاء في البيع الآجل الذي يتأجل فيه الثمن ، ومع أن الحطيطة من الثمن تجوز أيضا في البيع الآجل الذي يتأجل فيه المبيع ، إلا أن البيع على الصورة المبينة لا يجوز لأنه صار حيلة ربوية English Abstract: Al-Salam is a kind of deferred sale, in which advance payment is made for goods to be delivered later on. There is consensus among the fuqaha on its permissibility if contracting parties agree on the price. However, some fuqaha have said that ‘the price’ means the one prevailing in a market on the day of contract, while others have allowed the market price of the date of delivery. Even some fuqaha think that agreement on the latter price is possible provided a specific amount or a proportion of it is deducted from it. For example, if you pay 100 now and get after a year a commodity whose price in the market exceed by 10 over 100, then this extra amount will be a kind of riba’l-nasiah, because the process is more akin to lending than sale. The sale contract in this case is free from any risk. And most probably the buyer will transform the sale of the commodity to exchange to get 110. Thus, in spite of the fact that increasing price in credit sale is permissible to majority of fuqaha and similarly decreasing the price is also permissible in deferred sale, in which delivery of the commodity is delayed, the sale in the above mentioned case shall be invalid as it will be a subterfuge to earn interest.

Market Price of Salam on the Date of Delivery : Is it Permissible ?

Al-Salam is a kind of deferred sale, in which advance payment is made for goods to be delivered later on. There is consensus among the fuqaha on its permissibility if contracting parties agree on the price. However, some fuqaha have said that ‘the price’ means the one pervailing in a market on the day of contract, while others have allowed the market price on the date of delivery. Even some fuqaha think that agreement on the-latter price is possible provided a specific amount or a proportion of it is deducted from it. For example, if you pay 100 Saudi Riyal now and get after a year a commodity whose price in the market exceed by 10 over 100 Saudi Riyal, then this extra amount will be a kind of riba'l-nasiah , because the process is more akin to lending than sale. The sale contract in this case is free from any risk. And most probably the buyer will transform the sale of the commodity to exchange to get 110 . Thus, inspite of the fact that increasing price in credit sale is permissible to majority of fuqaha and similarly decreasing the price is also permissible in deferred sale, in which delivery of the commodity i delayed, the sale in the above mentioned case shall be invalid as it will be a subterfuge to earn interest.

State-owned enterprises and privatisation in Ghana

Between 1987 and 1999, Ghana's privatisation programme generated revenues for the government equivalent to about 14 per cent of GDP from a moribund public sector which had previously been dependent on state subventions, and thus succeeded in fulfilling a key role in easing the fiscal crisis and in fostering the Structural Adjustment Programme. The big question remained, however, whether the privatisation process would help the growth of Ghana's economy and help maximise political gains. This article reviews the experience of Ghana in privatising public enterprises, and assesses the impact of the ongoing privatisation programme on the Ghanaian economy. It suggests that, in spite of the high proceeds, the net direct revenues from privatisation have been relatively modest, due to the high outstanding credit sales, the high costs of divestiture and high outstanding liabilities of privatised firms. It also appears that the programme has placed too much emphasis on public finance rationalisation and faith in the market system, and too little on sociopolitical and regulatory issues. Equally, the inadequate attention given to post-privatisation regulation of privatised businesses, and the use of the divestiture programme as a political patronage instrument to reward the regime's friends and political insiders, has conferred limited success for privatisation in achieving its goal of enhancing efficiency, private sector investment and employment.

World Bank/GEF solar home system projects: experiences and lessons learned 1993–2000

Twelve projects provide energy services to off-grid rural households in developing countries by enhancing markets for solar home systems and by removing barriers to their dissemination. Project approaches are reviewed, along with early implementation experience and lessons suggested by experience. Most projects incorporate the following features: pilot private-sector and NGO delivery models; pilot consumer credit delivery mechanisms; pay first-cost subsidies and offer affordable system sizes; support policy development and capacity; develop codes and standards and establish certification, testing, and enforcement institutions; and conduct consumer awareness and marketing programs. Most projects are just beginning implementation; a few are almost completed. Lessons from early experience suggest that: solar home system delivery firms face a myriad of difficulties operating in rural areas; credit risk is a serious concern of both financiers and dealers and makes credit sales particularly challenging; technical performance of systems is becoming well-proven; customers desire a range of component options and service levels and can benefit from even small systems; projects must recognize the link between rural electric-grid extension and solar home system demand; and marketing campaigns can be extremely costly and time consuming in rural areas. Challenges are to demonstrate sustainable and replicable business models, develop regulatory models for energy-service concessions, and integrate rural electrification policy with solar home system delivery.

Mail order in the United Kingdom c. 1880-1960: how mail order competed with other forms of retailing

The history of general mail-order retailing in Britain has a distinctive trajectory. Though there were some important similarities, companies like Empire Stores, Great Universal Stores and Littlewoods did not simply replicate the Montgomery Ward/ Sears, Roebuck model. British mail-order retailing was shaped in response to the requirements of an urbanized market where less affluent socio-economic groups predominated and relied on credit sales and local spare-time agency to an extent unmatched elsewhere. During the period c. 1900-60, mail order's share of total retail sales grew at the expense of conventional outlets. The ability of the mail-order companies to compete successfully in this period is explained largely in terms of their role as credit providers and the efficacy of an agency system that allowed them to exploit pre-existing social networks.

Wetland credit sales as a strategy for achieving no-net-loss: The limitations of regulatory conditions

Wetland restoration and creation has been undertaken by the private sector, by public agencies, and by non-governmental organizations (NGOs) in order to create wetland credits for sale to wetland permit recipients. The permit recipients use credits purchased from these commercial sales ventures as compensation for activities permitted under Section 404 of the Clean Water Act of the United States and related state and local government programs. For commercial sales ventures to make a, positive contribution to achieving no-net-loss of wetlands, the credits sold must be ecologically successful, ventures must receive prices adequate to cover their credit production costs, and fill permit recipients must be willing and able to pay the resulting prices. From the perspective of the individual sales venture, costs and required prices are affected by 1) regulatory conditions governing when the wetland credits are sold, 2) the cost of gaining regulatory approval to sell credits, and 3) the future certainty of wetland credit demand. The consequences of these three factors for costs, prices, and availability of wetland credits are illustrated using a financial simulation of a hypothetical wetland restoration activity. A discussion of the results of the financial simulations and of barriers to competition among sales ventures leads to the conclusion that there are significant limits to achieving no net loss in the regulatory program through wetland credit sales.

Discussion of Accrual Accounting and Equity Valuation

At the heart of the analysis of Accrual Accounting and Equity Valuation by James A. Ohlson and Xiao-Jun Zhang is the suggestion that there exists an algebraic transformation of financial transactions which, if followed systematically, allows firm value to be expressed exclusively in terms of the firm's residual earnings and net operating assets. If one interprets the algebraic transformation as an accounting process, which is not unreasonable, then this suggests that there exist processes that result in firm value being expressed without reference to underlying cash flows and/or other noncash information that affects valuation (e.g., credit sales and purchases). In other words, there exist processes that allow firm value to be expressed parsimoniously.l Demonstrating the existence of an process (i.e., an algebraic relation) that results in firm value being expressed exclusively in terms of earnings and assets is a very simple idea, and not inelegant. It is an idea, however, with no economic context. Based on the questions that arose during the conference discussion of the paper, this seemed to be the focal point of the debate concerning the paper's contribution. For example, the premise underlying the paper is that firm value, as expressed in terms of cash flows and other noncash information, is common knowledge. If firm value is common knowledge, however, why does anyone care whether it can be summarized as an expression that involves

Effects of Wheat Export Policies on Market Shares

since the late 1970s. In response, the composition of export strategies has changed. All major wheat exporting countries have increased their use of export policies and strategies, many of which vary substantially across importing countries. During the mid to late 1970s, the primary export policies were PL480 for the United States and long-term agreements (LTAs) and credit guarantees for some competitor countries. In the early 1980s, the United States, Australia, and the European countries (EC) expanded their use of credit guarantees. In addition, Argentina had infrequent credit sales. In the late 1980s, use of direct price subsidies escalated while other strategies continued.' The fundamental objectives of most export policies are to increase export volume and/or to alter the distribution of market shares among exporting countries. In general, export policies affect both total imports by altering the importing country's budget constraint and the distribution of imports among exporting countries. As program administrators and policy makers review export policies, it is important to evaluate their comparative effectiveness on sales and market shares.2 Export policy instruments are intended to expand sales, but their impact depends on the composition and effectiveness of competitor countries' programs. Thus, impacts of alternative policies should be examined within a multicompetitive framework (Cooper and Nakanishi), in which concurrent impacts of other policies are included. Past studies evaluated impacts of policies on trade flows. For example, Anania, Bohman, and Carter analyzed the impact of export subsidies on international wheat exports. Fleming used pooled data to evaluate impacts of export strategies on the cross-sectional distribution of rice trade flows. Other studies have focused on the subsidy implied in provision of export credit guarantees (Skully; Baron). No known studies have analyzed multi-competitive interactions of export policies on the cross-sectional variability in international market shares.

Determinação do fator para cálculo do valor das prestações periódicas de um financiamento

This paper approaches the analytic determination of a factor "F" used for calculating the value of the installments on credit sales. The factor which is calculated according to the sale conditions, provides the value of the periodic installments as being multiplied by the price of the sold goods or served service.At first we subtract the general formula from the "F" factor and, afterwards we show some particular cases.Finally, we simulate hypothetical examples to make understanding easer.

GOVERNMENT POLICIES AND AGRICULTURAL SUPPLY RESPONSE: PADDY IN SRI LANKA

An aggregate analysis of supply response in the paddy (rice) sector of Sri Lanka during 1952-87 is conducted to identify the impact of pricing policy, irrigation programmes, institutional credit and concessional sales on area, yield and overall supply. The focus of the estimation procedure is the selection of an appropriate functional form for regressions and on the price variable that best represents the price to which producers respond in making area and yield decisions. In the case of both area and yield, the econometric criteria favour the acceptance of log-linear equations with the ratio of the guaranteed price of paddy to fertiliser price. On the basis of overall supply elasticity estimates, it is concluded that while pricing policy, irrigation programmes and institutional credit provide incentives to the expansion of paddy production, concessional sales of rice act as a disincentive.

The U.S. and Ethiopia: The Politics of Military Assistance

This article concerns the military assistance relationship between the United States and Ethiopia, especially during the early years of the Ethiopian revolution, from 1974 to 1977. The interaction between the outbreak of the uprising and American military assistance and the impact of one upon the other are our main concerns. Besides the objective needs of the revolution to reorient Ethiopia's domestic and external politics, other important forces contributed to the abrogation of the U.S.-Ethiopia Mutual Defense Assistance Agreement that had tied the two countries together for nearly three decades. Both the process and substance of the assistance relationship are analyzed-from the moment the Ethiopian armed forces intervened in the unfolding revolution to the time Menghistu Haile Mariam captured the political leadership. Such forces as the radicalization of Ethiopia's domestic politics, the American shift of its assistance policy from grant aid to foreign military cash and credit sales, the Soviet decision to embrace Menghistu, and American perceptions and reactions to the revolution were all important contributary factors to the MDAA's demise. In the face of new political realities in Ethiopia, the assumptions upon which the U.S.-Ethiopia relationship was built could no longer hold.

THE TRADE DISCOUNT DECISION: A MARKOV CHAIN APPROACH*

ABSTRACTEconomic theory indicates that higher returns are required from investments that have higher risk. Two major reasons for offering trade discounts are to stimulate sales and to speed up cash receipts. Both sales increases and the earlier receipt of cash impact the risk/return characteristics of a firm. This study uses a Markov chain model to demonstrate how alternative trade credit policies impact the risk and required returns of a firm. The amount of risk and return per credit sale is calculated, and the coefficient of variation is used as a risk/return measure per credit sale. The study concludes that trade discounts can have a favorable impact on the risk/return characteristics of a firm, even in the absence of increased sales volume. Other discount decision factors which are either directly or indirectly determined in this paper include: (1) the average number of periods for which an account is outstanding, (2) the probability of collection and bad‐debt losses over the average account period, (3) the average speed of payment, and (4) the average amount of cash tied up in accounts receivable.

Establishing and Maintaining an Efficient Credit Sales Program

Establishing and Maintaining an Efficient Credit Sales Program

Comment and Correction: Opportunity Cost in the Evaluation of Investment in Accounts Receivable

In a recent issue of Financial Management, John Oh argues that the conventional practice of measuring the dollar expense of accounts receivable in terms of variable production costs underestimates the relevant capital costs of more liberal credit policies. As an alternative, he suggests that the market value of credit sales should be used to measure the investment expense of accounts receivable. Although we agree with Oh's criticism of the conventional practice, we believe that the amended version he advances is itself an incorrect method for evaluating investments in receivables. We contend that such a measurement overestimates the opportunity expense of credit-