scholarly journals Trade credit management in wholesale companies based on statistical methods

2018 ◽  
Vol 15 (5) ◽  
pp. 27-39
Author(s):  
E. V. Ermakova
Keyword(s):  
Discriminant Analysis ◽  
Statistical Methods ◽  
Logistic Model ◽  
Trade Credit ◽  
Delay Period ◽  
Credit Management ◽  
Financial Characteristics ◽  
Reasonable Choice ◽  
Different Characteristics ◽  
Binomial Logistic Model

Study purpose. The paper shows the application of statistical methods for the trade credit management in the wholesale Russian companies. In this industry, the companies deal with a huge amount of customers, while trade credit is a common practice. As a result, fast and reasonable choice of trade credit terms becomes especially important for wholesale companies. The main study purpose is to provide the methods to choose the trade credit terms.Materials and methods. In this paper, the methods for trade credit management are based of the empirical research where binomial logistic model and discriminant analysis were used. The binomial logistic model was used to assess the customers’ reliability, his inclination to violate the terms specified in the contract. The delay period must be chosen when trade credit is provided. In the paper, the discriminant analysis was applied to make the decision. The discriminant functions allow choosing such a period of delay that will be broken with the least probability by the customer with certain financial and non-financial characteristics. The data used refer to 11 Russian companies from the wholesale industry and include 720 observations for 2016-2017.Results. As a result, the possibility of due repayment may be evaluated and the payment delay may be selected according to individual customers’ characteristics. Eight factors that characterize the liquidity of the purchaser, its profitability, turnover, and non-financial factors became significant to assess the reliability. In conclusion, the paper contains the practical example for four hypothetical purchasers with different characteristics. The higher the reliability of the customer, the more attractive conditions can be offered for him, depending on the propensity to risk of the wholesale company, as well as its financial opportunities.Conclusion. This article contains the model to evaluate the possibility of due repayment and algorithm to select the payment delay, which are based on the binomial logistic model and classification functions. Although there are a large number of methods to select the terms of trade credit, the majority of them have serious limitations. The most of methods are based only on the professional experience, while statistical analysis, in presence, is based on data of one company because of the confidentiality of necessary information. In contrast, this article is based on the empirical data and includes the delay period selection, which is slightly enlightened in the literature.

scholarly journals Using Linear Discriminant Analysis to Classify Snowfall Situations into Avalanching and Non-Avalanching Ones

1977 ◽  
Vol 19 (81) ◽  
pp. 679-680
Author(s):  
N.F. Drozdovskaya
Keyword(s):  
Discriminant Analysis ◽  
Statistical Methods ◽  
Training Sample ◽  
Dispersion Analysis ◽  
Snow Accumulation ◽  
Discriminant Functions ◽  
Prognostic Information ◽  
Individual Parameter ◽  
Linear Discriminant ◽  
Avalanche Forecasting

Abstract The existing methods of predicting avalanche danger often do not meet users’ demands because of the empiric character of the insufficient volume of information used. In such forecasts the contribution of each individual parameter into the prognostic information is unknown, and this is very important when studying such an event as avalanche formation, which is conditioned by a complex interaction of numerous factors, including snow accumulation, the state of snow thickness, and the conditions of its development. It is obvious that such problems can be successfully solved by statistical methods, and that explains the growing interest in numerical methods of avalanche forecasting. Problems of multi-dimensional observations arises in many scientific fields. The method suited for this problem is discriminant analysis, the purpose of which is to divide a multi-dimensional observation vector into predetermined classes. This study considers the prognostic (diagnostic) problems of fresh-snow avalanches released during snowfall or in the two days after it has ceased. The theoretical basis is a complex of statistical methods: correlation and dispersion analysis, “sifting" for the choice of predictors’ informative groups, construction of linear parametric discriminant functions, predictions based on training sample, and verification of discriminant functions based on independent material. The archive used in the study consisted of 500 avalanching cases and 1 300 non-avalanching ones. All situations were grouped according to geomorphological characteristics. Each situation is described by eight meteorological characteristics. The results of classification of snowfall situations into avalanching and non-avalanching ones are as follows: reliability of ρ is from 75% to 91%, H from 0.15 to 0.51; based on independent material the reliability of ρ is from 63% to 85%, H from 0.10 to 0.56. This paper has been accepted in revised form for publication in a later issue of the Journal of Glaciology.

scholarly journals The Assessment of Client Creditworthiness Using Predictive Methods Based on Multivariate Discriminant Analysis

2017 ◽  
Vol 2 (1) ◽  
pp. 17-21
Author(s):  
Anna Siekelova ◽  
Erika Spuchlakova
Keyword(s):  
Discriminant Analysis ◽  
Trade Credit ◽  
Debt Crisis ◽  
Balance Sheet ◽  
Jel Classification ◽  
Multivariate Discriminant Analysis ◽  
Predictive Methods ◽  
European Economies ◽  
Brighter Future ◽  
Multivariate Discriminant

Objective - Trade credit is the most important source of external finance for many companies. It appears on every balance sheet and represents more than 50 percent of company's short-term liabilities and a third of all company's total liabilities in OECD countries. Late payment of invoices may suffer firm's solvency. The European economies are now putting the years of financial turmoil and debt crisis behind them and several macro-economic indicators are pointing towards a brighter future. The aim of this paper is to assess creditworthiness of companies. Methodology/Technique - Assessment of client creditworthiness carried out using predictive methods based on multivariate discriminant analysis Findings - The situation in the enterprise can be characterized as stable. An enterprise that chooses this client to provide it a trade credit should also consider supplementing the predictive models by complex financial and economic analysis and review of available. If the firm provides trade credit to more clients, it is necessary to consider that the terms of trade credits may not be the same for everyone but also it is not in the power of company to approach to each client individually. Novelty - The study suggests that client groups can be created by using cluster analysis. Thus, the company may increase efficiency in the provision of trade credit. Type of Paper Review Keywords: Trade Credit; Trade Credit Receivables; Late Payment; Predictive Model; Z Score; IN 01; Taffler Model; G Index; SAF 2002. JEL Classification: E51, G21, G33.

scholarly journals A Study of Australian Trade Credit Management Outsourcing Practices

2004 ◽  
Vol 14 (32) ◽  
pp. 53-62 ◽  
Author(s):  
Dawne Lamminmaki ◽  
Chris Guilding
Keyword(s):  
Trade Credit ◽  
Credit Management

scholarly journals Trade Credit Management Strategies in SMEs and the COVID-19 Pandemic—A Case of Poland

2020 ◽  
Vol 12 (15) ◽  
pp. 6114
Author(s):  
Grzegorz Zimon ◽  
Robert Dankiewicz
Keyword(s):  
Trade Credit ◽  
Management Strategies ◽  
Management Policy ◽  
Small Enterprise ◽  
Credit Management ◽  
Group Purchasing Organization ◽  
Two Measures ◽  
Low Performance ◽  
Polish Economy

Every large or small enterprise needs to have financial liquidity and to be able to generate profits to develop. It is not important in which sector it operates, whether it is a private or public one, but profits and safety are two elements every enterprise is not able to function without. The low performance of these two measures can cause a number of difficulties for managers. To avoid this, leading companies, especially the smallest ones, should optimize the trade credit management policy. Most often, SMEs’ (small and medium-sized enterprises) owners try to work together as part of a group purchasing organization, which positively affects trade credit management. The aim of the paper is to present the trade credit management strategy in Polish group purchasing organizations during the COVID-19 pandemic. The study uses data on the construction sector because it is one of the most important segments of the Polish economy, which is financed to a large extent with trade credit. The paper indicates the mechanisms whose applications allowed SMEs operating in purchasing groups to change trade credit management strategies in such a way that these units could operate calmly and safely in the market. These changes could be observed in purchasing goods with a large reserve, strictly controlling all receivables, switching to cash sales or limiting sales on long-term trade credit. The analysis showed that enterprises changed trade credit management strategies from moderately conservative to highly conservative.

scholarly journals Phenotypic characteristics and comparative evaluation of preserved animals from Lithuanian pig breeds

2019 ◽  
Vol 26 (2) ◽  
Author(s):  
Violeta Razmaitė ◽  
Virginija Jatkauskienė
Keyword(s):  
Discriminant Analysis ◽  
Comparative Evaluation ◽  
Tail Length ◽  
Phenotypic Characterization ◽  
Physiological Status ◽  
Body Dimensions ◽  
Pig Breeds ◽  
Physical Measurements ◽  
Different Characteristics

The aim of the study was phenotypic characterization and comparative evaluation of Lithuanian Indigenous Wattle and Lithuanian White pigs. Physical measurements were taken only from a representative set of adult animals: sows and boars. Evaluation of breeds included discrete (qualitative) and quantitative variables and was performed according to the Guidelines of FAO for Phenotypic Characterization of Animal Genetic Resources. The data were subjected to the analysis of variance in general linear (GLM) and discriminant analysis procedures in SPSS 17. The qualitative characterization of preserved animals validated the characteristics of Lithuanian pig breeds described in old literature. The comparative evaluation of the physical measurements of Lithuanian White and Lithuanian Indigenous Wattle pigs showed the highest significant differences in body, ear and tail length. Due to the different physiological status of females the statement that Lithuanian White pigs are larger animals than Lithuanian Indigenous Wattle pigs better confirms the weight and body dimensions of males. Small differences in body dimensions were found only between the youngest animal groups under 24 months of age and older animals. However, the results of the canonical discriminant analysis did not give any evidence that pigs of different age have different characteristics.

scholarly journals MODELING AND SIMULATION FOR SUPPLY CHAIN FINANCE UNDER UNCERTAIN ENVIRONMENT

2020 ◽  
Vol 26 (4) ◽  
pp. 725-750 ◽  
Author(s):  
Wei Jin ◽  
Chengfu Wang
Keyword(s):  
Supply Chain ◽  
Trade Credit ◽  
Stackelberg Game ◽  
Hybrid Strategy ◽  
Accounts Receivable ◽  
Capital Shortage ◽  
Supply Chain Finance ◽  
Bankruptcy Costs ◽  
Financial Characteristics

This paper studies the role of factoring in a bilateral supply chain, where both the supplier and retailer are financially constrained. Applying the stylized Stackelberg game, we analytically present that the supplier’s capital shortage limits the advantage of trade credit provided to the retailer. To overcome this limitation, we design a hybrid strategy composing of trade credit and factoring, and then investigate how the supplier uses factoring strategy to achieve the best performance. Analytical and numerical results show that: (1) each supply chain partner can benefit from factoring, and the benefits depend on operational and financial characteristics; (2) in a fairly priced factoring market, bankruptcy costs reduce the benefits of factoring, but does not change the dominance of full factoring; (3) in a strategically priced factoring market, partial factoring may dominate full factoring. Managerially, our study implies that a supplier may benefit from dividing his accounts receivable when facing a factor with a strong pricing ability.

scholarly journals Management of trade credit by small and medium-sized enterprises

2018 ◽  
Vol 11 (1) ◽  
Author(s):  
Werner H. Otto
Keyword(s):  
South African ◽  
Small Firms ◽  
Management Practices ◽  
Trade Credit ◽  
Descriptive Statistics ◽  
Statistical Techniques ◽  
The South ◽  
Credit Management ◽  
African Development

This study identifies the trade credit management situation within the small and medium-sized enterprise (SME) environment. The purpose of this study is to determine the trade credit management practices of SMEs, focussing on debtors alone, in order to establish whether South African SMEs mismanage trade credit. Focussing on SMEs, this study created a unique opportunity to determine the trade credit management practices of SMEs specifically. This article provides vital evidence containing SMEs’ trade credit management practices and insight to entrepreneurs (SME owners) and government regarding possible reasons why SMEs find it difficult to manage trade credit effectively. Data were analysed using statistical techniques such as descriptive statistics, frequencies, cross-tabulations and mean scores. The intention is that SMEs and small firms can use the results of this study in assessing the appropriateness and effectiveness of their own practices and, in doing so, contribute towards the sustainability and viability of SMEs in order to empower SMEs to operate successfully in addressing the South African development challenges.

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