A platform for research: civil engineering, architecture and urbanism
A platform for research: civil engineering, architecture and urbanism
Contractor financial credit limits; their derivation and implications for materials suppliers
Current methodologies for 'calculating' contractors' credit limits (for supply of construction materials) are discussed and critically appraised. It is highlighted that credit limit imposition should be a function of a supplier's financial characteristics as well as potential debtors' probability of defaulting upon repayment. A conceptually new approach is presented to identify whether an additional contractor's trade results in a worthwhile gain in utility for the supplier. It is identified, inter alia, that (i) allowing very few contractors credit facilities that account for a large proportion of suppliers' potential profits, (ii) having inaccurate creditworthiness evaluation procedures, and (iii) operating on low targeted profit margins are the characteristics that inflict maximum financial risk upon materials suppliers.
Contractor financial credit limits; their derivation and implications for materials suppliers
Current methodologies for 'calculating' contractors' credit limits (for supply of construction materials) are discussed and critically appraised. It is highlighted that credit limit imposition should be a function of a supplier's financial characteristics as well as potential debtors' probability of defaulting upon repayment. A conceptually new approach is presented to identify whether an additional contractor's trade results in a worthwhile gain in utility for the supplier. It is identified, inter alia, that (i) allowing very few contractors credit facilities that account for a large proportion of suppliers' potential profits, (ii) having inaccurate creditworthiness evaluation procedures, and (iii) operating on low targeted profit margins are the characteristics that inflict maximum financial risk upon materials suppliers.
Contractor financial credit limits; their derivation and implications for materials suppliers
Nicholas, J. (author) / Holt, G. D. (author) / Mihsein, M. (author)
Construction Management and Economics ; 18 ; 535-545
2000-07-01
11 pages
Article (Journal)
Electronic Resource
English
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