What is Credit Risk?

[klopp]

Im not sure this is the right place to put this one. But can anyone in the business world tell me what Credit Risk is?

[Harley]

Businesses almost always sell to each other on credit,terms range from 7 to 60 days depending on the industry sector. Measuring credit risk is a calculation of the worth of the purchaser against period of credit being granted. A business selling on 60 day terms will therefor be granting more credit to customers than one selling on 7 day terms.Customers that are regarded as "Blue chip" eg PLC's and local authorities are awarded unlimited credit risk status whereas a small self employed builder would be seen as a high credit risk and would have to settle his account on a regular basis to stay within his credit limit. Hope this helps.