Which of the following is true with regards to establishing credit limits for customers?
A)The ability to add a new customer and change or assign a credit limit should be devolved to staff in the sales area
B)To reduce the risk of accepting an uncreditworthy customer or incorrectly rejecting a creditworthy customer,it is important to independently maintain customer accounts and credit limits.
C)Credit limits should be established based on desired sales targets.
D)The Chief Financial Officer should overview all customer credit limits.

Question

Quizplus · Accepted Answer

It is important to maintain customer accounts and credit limits independently to reduce the risk of accepting uncreditworthy customers or incorrectly rejecting creditworthy ones. Devolving the ability to assign credit limits to staff in the sales area could lead to conflicts of interest or errors. Establishing credit limits based on desired sales targets is not a sound practice as it could lead to overextending credit to customers who may not be able to pay. The CFO need not overview all customer credit limits but may be involved in establishing credit policies and guidelines.

Which of the Following Is True with Regards to Establishing