Business, Legal & Accounting Glossary
Effective debt is the net sum total of a business concern’s (or individual entity’s) outstanding debt. Effective debt includes items like bond issues, loans and leases payments to name a few. It provides an accurate measurement of the total debt load of a company, to investors. Bad debt is a serious financial problem for business houses. Cash flow problems if aggravated can even lead to bankruptcy. Hence to efficiently manage effective demand problems companies put in place tailor-made credit control management policies. They also initiate effective debt collection activities. This results in the timely settlement of outstanding debts of a company from its customers and also maintains healthy customer relations.
They directly communicate with the creditor party on behalf of a borrower. These companies try to bring down the debt amount of clients. This kind of debt relief is also known as debt settlement. It is an alternative option for debt consolidation. Third-Party debt collectors collect debt on behalf of lenders. However, these people are not sympathetic towards the plight of borrowers (who are at default). Process of debt collection is governed by different sets of rules and regulations as per a country’s constitutional framework.
Governments worldwide implement effective public debt management policies.
Some objectives for public debt management are stated below.
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This glossary post was last updated: 26th March, 2020 | 3 Views.