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Koh Yok Hwa

012024020232

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1. Character: conduct a creditworthiness check before extending trade credit to a customer to check if he has a good paying record and reliability.

2. Capacity: to evaluate the maximum ability and amount the customer could pay.

3. Capital: check the resources and reserve one owns to meet his payment commitment.

4. Conditions: Evaluate the general economic condition of the market before giving out a lot of credit. Businesses should never exposed to too many unnecessary risks.

5. Collateral: Request the customer to provide some assets to use as a guarantee for the credit line. However, this is no longer a welcome move in the present economic environment.

In conclusion, the 5C in receivable management has been widely adopted in the Malaysian business circle and remains relevant.

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Businesses use a supply of goods and services from suppliers to grow their business.

They get the goods first and pay later.

The trade-credit facility is considered a source of funds.

In general, businesses in Malaysia grow because trade credit is widely established. Businessman with small capital can also do business because of a credit line extended by their suppliers.

However, all businesses are advised to handle their credit trustworthiness well by making payments within a reasonable period.

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Business can use MRP to schedule raw materials needed on time and with right amount required. It reduces inventory cost and handling cost.

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Modern businesses adopt many ways to reduce their inventory holding cost and efficiency.

For the Just In Time (JIT) management approach, parts are only delivered to the production line when it is needed. It saves a lot of inventory cost and warehousing costs.

The economic Order Quantity (ECQ) method also helps save holding, ordering and storage costs.

By deploying modern inventory management knowledge and devices, businesses become more productive and efficient in managing their capital.

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“Never take your eyes off the cash flow because it’s the lifeblood of business.”
—Sir Richard Branson, business magnate, investor, author and philanthropist

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“Revenue is vanity, profit is sanity, but cash is king.”
—Unknown