Discuss the rationale behind a liberalization of credit poli
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Discuss the rationale behind a liberalization of credit policy and its effect on sales and accounts receivable, in particular any associated financing impacts. What organizations have been in the news due to their poor credit ratings, and how has that affected their business?
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Discuss the rationale behind a liberalization of credit policy and its effect on sales and accounts receivable, in particular any associated financing impacts. What organizations have been in the news due to their poor credit ratings, and how has that affected their business?
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Discuss the rationale behind a liberalization of credit policy and its effect on sales and accounts receivable, in particular any associated financing impacts. What organizations have been in the news due to their poor credit ratings, and how has that affected their business?
Solution:
Discuss the rationale behind a liberalization of credit policy and its effect on sales and accounts receivable, in particular any associated financing impacts.
When a company initiates a liberal credit policy, they do so under the premise that it will increase sales. A liberal policy does increase sales, and it also increases accounts receivable. The company is now extending their credit terms, giving customers a longer period of time to pay, and extending credit to customers on a more lenient basis, including customers who before would have been denied credit due to the non-lenient credit policies. A new business almost always has to have a liberal credit policy, in order to gain customers. If credit is ...
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