Your Friend Mark Has Opened an Office Supply Store

Question

Examlex · Accepted Answer

The Answer is 1. Establish a reasonable policy for extending credit. The company needs to consider the risks of having either a 'too tight' or 'too loose' credit policy. Potential credit customers should be screened appropriately.
2. The company should decide upon the required payment period and communicate it to customers and employees. This period should be in line with the ones established by competitors. Also employees should enforce the collection period but yet exercise judgment in unusual circumstances.
3. The company should evaluate the relationship among sales accounts receivable and cash collections to monitor trends and watch for potential problems.
4. The company should prepare an accounts receivable aging schedule on a regular basis. The collection department should follow up on past due accounts in a timely and professional manner. There should be a clear company policy regarding collection efforts and when to write off accounts.

Your Friend Mark Has Opened an Office Supply Store

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