How to manage credit risk

Inês Lisboa, Joana Miguel


Purpose: Managing credit risk is crucial for a company’s solvency. Most of the company’s receivables are in credit. Prompt payments are almost insignificant, and the delay of turnover payments has become a tendency, especially with the 2007/2008 financial crisis. Therefore, companies must know how to set individual credit to customers, how to protect from non-payments, how to act timely and how to minimize indebtedness. This paper aims to highlight answers to all this questions.

Methodology: This paper deals with the theoretical exposition of credit management, presenting illustrations and explaining how to interpret financial data.

Originality: This paper represents a major contribution to the empirical literature and practice of managing credit. An in-depth study of the thematic is provided. We explain all the inputs needed for a future implementation of a customer credit limit, and how the company can manage credit in the way to maximize its value and minimize risk.

Findings: Managing credit risk contributes to decrease the company’s risk and to increase its value. Companies may establish credit policies to build relationships of respect and trust with customers. Moreover, it helps to decrease the company’s indebtedness, and to increase liquidity. Finally, a company that control customers’ credit avoids to lose money due to customer’s insolvency.  

Full Text:



Albright, B. (2017). How to manage bad debt as deductibles and copays rise, providers face more care. Behavioral Healthcare Executive, 29-32.

Atradius (2017). Credit Insurance. Retrieved from Atradius:

Banco de Portugal. (2007). Relatório Final sobre a Consulta do Banco de Portugal n.2/2007 relativao ao Morelo de Avaliação de Riscos – MAR. Retrieved from Banco de Portugal:

Banco de Portugal, 2018). Estatísticas online - BPstat. Retrieved from

Batista, A. (2004). A Gestão do Crédito como Vantagem Competitiva. Vida Económica.

Boďa, M., & Kanderová, M. (2010). Cash-flow at risk & earnings at risk. In ZIMKA, Proceedings of the International Scientific Conference AMSE 2010 Demänovská Dolina, Slovakia, 45-51.

Bloem, A., & Gorter, C. (2001). The Treatment of Nonperforming Loans in Macroeconomic Statistics. Working Paper 01/209, International Monetary Fund.

Brealey, R., Myers, S., & Allen, F. (2016). Principles of corporate finance. McGraw-Hill/Irwin.

Caeiro, V. (2011). Avaliação do risco de crédito de clientes empresariais. Levantamento de requisitos e estimação de modelos. Master dissertation in Finance, Instituto Superior de Economia e Gestão da Universidade Técnica de Lisboa.

Carreira, P. (2012). Gestão de Crédito e Cobranças. Internship report of the master in Management. Faculdade de Economia da Universidade de Coimbra.

Cosec. (2017). Credit Insurance. Retrieved from Cosec:

Deloitte. (2017). Financial risk. Retrieved from Financial risk:

Frajtova-Michalikova K., Spuchlakova E., & Cug J., (2014). A Comparative Anatomy of Credit Risk Models. 2nd International Conference on Economics and Social Science (ICESS 2014), Information Engineering Research Institute, 69-74.

Gameiro, I. M., Soares, C., & Sousa, J. (2011). Política monetária e estabilidade financeira: um debate em aberto. Boletim Econômico, 7-27.

Informa D&B (2017a). Company history. Retrieved from Informa D&B:

Informa D&B (2017b). Financial report. Retrieved from Informa D&B:

Jaros, J., Melichar, V., & Svadlenka, L., (2014). Impact of the Financial Crisis on Capital Markets and Global Economic Performance. 18th International Conference on Transport Means, Kaunas Lithuania, 431-434.

Jorion, P. (2006). Value at Risk . MCGraw-Hill Publisher.

Klieštik, T., & Cúg, J. (2015). Comparison of Selected Models of Credit Risk. Procedia Economics and Finance 23, 356-361.

Kočišová, K., & Mišanková, M. (2014). Assessment model used for determination of default risk. In Proceedings of ICMEBIS 2014 International Conference on Management, Education, Business, and Information Science, Shanghai, China, EDUGait Press, Canada, 39-42.

Kollar, B. (2014). Credit Value at Risk and options of its Measurement. In 2nd international conference on economics and social science. Information Engineering Research Institute, Advances in Education Research, 61,143-147.

Kollar, B., Weissovalvana, I., & Siekelova, A. (2015). Quantification of credit risk with the use of CreditMetrics. Procedia Economics and Finance, 26, 311-316.

Misankova, M., Kocisova, K., Frajtova-Michalikova, K., & Adamko, P. (2014). CreditMetrics and its use for the calculation of credit risk. In 2nd International Conference on Economics and Social Science. Information Engineering Research Institute, Advances in Education Research, 61,124-129.

Mun, J. (2004). Applied Risk Analysis. John Wiley & Sons.

Neves, J. (2012). Análise e Relato Financeiro. Uma visão integrada de Gestão. Texto Editores, Lda.

Racius (2018). Informação estatística. Retrieved from

Roberto, M. (2017). Enviar dinheiro para fora de Angola tornou-se missão quase impossível. Publico. Retrieved from

Ross, Westerfield, & Jaff. (2016). Corporate Finance. McGraw-Hill Education.

Siekelova, A., Kollar, B., & Weissova, I. (2015). Impact of credit management. Procedia Economics and Finance, 26, 325-331.

Stiglitz, J., & Weiss, A., (1981). Credit rationing in markets with imperfect information. American Economic Review, 71(3), 393-410.

Tsuruta, D. (2013). Customer relationships and the provision of trade credit during a recession. Applied Financial Economics, 23(12), 1017-1031.

Copyright (c)


European Journal of Applied Business and Management

ISSN: 2183-5594