COLLECTION OF POLICIES AND PRATICES.pptx - COLLECTION OF POLICIES AND PRATICES \u2022 HIGH CREDIT RATING extend credit \u2022 LOW CREDIT RATING it will result

COLLECTION OF POLICIES AND PRATICES.pptx - COLLECTION OF...

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COLLECTION OF POLICIES AND PRATICES
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HIGH CREDIT RATING- extend credit LOW CREDIT RATING- it will result to slow paying accounts or even bad debts affecting the central operation of the business
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CAUSE OF DEINQUENT ACCOUNTS 1.) Debtor who misunderstands the credit terms 2.) the careless debtor 3.) temporarily out of funds 4.) chronic slow debtor 5.) unethical debtor 6.) insolvent debtor 7.) dishonest debtor
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Importance of prompt collection 1.) Requires less working capital tied up in receivables. 2.) reduces the losses from bad debts 3.) decreases the probability of expensive legal action 4.) reduces costs of correspondence, bookkeeping etc 5
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PRINCIPLES OF A SOUND COLLECTION POLICY 1.) The Cr. Should inform the debtor in PRECISE, CLEAR words the terms of credit. 2.) When an account becomes overdue , the collection machinery
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  • Spring '14
  • FelishaK.McCaster
  • Debt

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