a)Contract default risk – the seller not only loses goods and cash from sales, but has to incur collection expenses as well.
b)Opportunitycost – your restricted cash on credit shall not be invested or utilized for other business activities.
c)Guarantee or mortgage risk – you have to incur cost to verify the value of the guarantee or the collateral from the buyer and take risk of their validity.
d)Cost to maintain a credit management function;
e)Cost relating to training provided to credit management department;
f)Time cost – purchasing power of same amount shall decrease;
