Role of Credit and Inventory Management of a Company

Executive Summary

In this paper we have covered that how a company manages its credit and inventory in order to operate its business with efficiency and effectiveness. Credit management is used to recognize the functions of accounting which is important for the process of recovery and to maintain high levels of liquidity in order to serve the company in times of need. It also helps in maintaining the financial stability of a company.

When the credit management process works effectively and efficiently, almost everyone involves the benefits of the effort. The supplier got a reasonable amount of guarantee that invoices should be issued to a customer and he will be paid within the bounds terms, or that normal minimum payments will then be received on the account balances of credit. Customers got the opportunity to create a strong image with the supplier and therefore generate a tangible reference of credit.

Efficient inventory management plays a vital role which is the reality that it decreases the costs through the exploitation of economies of scale which can appear within the distribution or production. The inventory becomes visible like raw material, WIP or finished goods. The inventory is a main source of costs in the chain of supply. For instance, a supply chain which got big inventory of retail got a high level of react-ness because the customers enters the store and then comes out with that product which he or she was looking for. Another important role is the reality that it decreases the costs through the exploitation of economies of scale which can appear within the distribution or production. The inventory becomes visible like raw material, WIP or finished goods. The inventory is a main source of costs in the chain of supply. For instance, a supply chain which got big inventory of retail got a high level of react-ness because the customers enters the store and then comes out with that product which he or she was looking for. On the contrary, the supply chain with small inventory can be effective but that will create clients to wait for a few months or weeks for those products which they want. The inventory got a significant role in the flow of material of the supply chain.

In the company which we have chosen is Apple, it is using the most sophisticated systems for inventory and credit management in order to stay ahead from its competitors that are the reason why it is performing so successfully.

Purpose of the Paper

In this paper we are going to examine the role of credit and inventory management of a company. Therefore we have taken Apple as a company so that we can analyze the factors which contributed to the success of the company along with other factors which resulted in huge success of the company itself.

Introduction

The term credit management is used to recognize the functions of accounting which is normally conducted under the roof of Accounts ...