ACC 557 Week 5 DQ2
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This 0 page Study Guide was uploaded by an elite notetaker on Wednesday November 11, 2015. The Study Guide belongs to fin571 at Kaplan University taught by in Fall 2015. Since its upload, it has received 23 views.
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Date Created: 11/11/15
ACC 557 Week 5 DQ2 Receivables Please respond to the following Assess the external and internal factors that in uence credit policy and decision making within a company that extends credit to its customer when providing a good or service on account Indicate the factor of most significance in today s business environment Provide support for your rationale Assuming that a certain percentage of customers will be deemed high risk recommend a strategy to minimize a company s bad debt exposure Indicate how the company would implement the strategy Provide support for your recommendation Financial risk refers to the risks that businesses run when making investments planning for the future and conducting daytoday operations External amp Intemal External risks have to do with making decisions that are dependent on outside factors and internal risks are dependent on internal factors Internal risks have to do with strategies and programs that the company puts into place Choices made by those who work for the company can affect the outcome A credit policy is designed by the company once they decide that they are willing to take the risk of extending credit to customers The factor that is most affected in today s business environment is the economy and credit scores You must ensure that the consumer you want to lend money too or give a product or service to is likely to repay Collecting bad debts is not fun nor is it easy to do All businesses will have some customers who are either late making payments or do not make payments at all The economy is affecting unemployment rates and people unemployed cannot pay their bills What is credit As a result their credit ratings drop and the lower they get the less chance they have of receiving any credit The company s credit policy should consist of terms of sale credit analysis of the consumer and a collection policy What is credit Terms of the sale should include how long they have to pay back any cash discounts available the discount period and the type of credit instrument Customer demand should be analyzed to ensure that the credit policy is accurate A credit limit should be set and the interest should be in direct relation to the consumer s credit score The better the credit the lower the interest rate payment assigned to the account The collection policy is set to assist the company with identifying those accounts with issues Late accounts are charged a late fee After 10 days you could send a letter demanding payment The longer the debt is outstanding the higher the likelihood that you will not be paid You should include settlement options for obtaining partial payment as well as criteria for writing off the balance as a bad debt Soliman External amp internal factors of financial risknd Retrieved from http WWWeh0Wcom1ist7465 193externa1 internalfactorsfinancia1 riskhtm1
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