The credit limit represents the maximum amount a lender is willing to extend to a borrower, defining their borrowing capacity. Credit risk exposure, on the other hand, assesses the potential financial loss a lender faces if a borrower defaults on their obligations, considering factors such as the borrower’s creditworthiness and the amount of outstanding debt. While the credit limit sets a boundary for borrowing, credit risk exposure quantifies the potential risk associated with extending credit to a particular borrower.
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Emagia is a leading provider of AI-powered Order-to-Cash (O2C) automation platform that modernizes finance operations for midsize to large global businesses. Many global businesses and shared service centers use Emagia’s Enterprise Receivables Management System to transform to digital world-class operations in credit, invoicing and payments, receivables, collections, deductions, cash application and cash forecasting. Emagia solutions improve their customers DSO, cash flow, credit risk, operational cost, compliance and profitability.