question archive Steve Jones is the 35-year-old owner of a highly competitive small business that supplies temporary office help
Steve Jones is the 35-year-old owner of a highly competitive small business that supplies temporary office help
Subject:ManagementPrice:3.87 Bought7
Steve Jones is the 35-year-old owner of a highly competitive small business that supplies temporary office help. Like most business people, he is always looking for ways to increase profit. However, the nature of his competition makes it very difficult to raise prices for the temps' services, while reducing their wages makes recruiting difficult. Jones has, nevertheless, found an area—bad debts—in which improvement should increase profits. A friend and business consultant met with Jones to advise him on credit management policies. Jones was pleased to get this friend's advice, as bad debts were costing him about 2 percent of sales. Currently, Jones has no system for managing credit.
What advice would you give Jones regarding the screening of new credit customers?
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Answer:
The advice one should give jones regarding the screening of new credit customers includes:
- -A credit check
- A reasonable credit score
- Low initial credit limits until credit history is established
- Review existing credit lines annually and reduce as needed to limit exposure
Step-by-step explanation
The reason for this is that one can ensure that credit is only given to qualified customers, and one can reduce their exposure with having lower credit limits and conducting annual reviews.
