Axis
Valued Contributor
The issuing of credit sales in a business organisation is absolutely an optional activity. However for those business organisations and Enterprises who see the need to issue credit sales of its goods and services to customers and clients are more likely to earn the recognition as well as noticeability of their business or company's product to members of the public and also there are more assured to earn the trust and loyalty of members of the public. Also business organisations and Enterprises that issues credit sales of its goods and services are more likely to retain potential customers, and the reason is because, the customers and clients in which the credit sales of this business goods and services are being issued to, may perceive the business organisation as not only after their income or the money in which they have to give to purchase a particular product, but also more interested about their satisfaction and comfortability with their products. In as much as issuing of credit sales maybe a credible activities for business organisations it is advised that businesses do not overdo it, over issuing of credit sales to customers and clients my results to the following consequences and repercussions:
INCREASED RISK OF BAD DEBT: When a business extends too much credit, it increases the risk of customers defaulting on their payments. This can lead to significant losses for the business, particularly if it has not taken appropriate measures to mitigate the risk.
CASH FLOW PROBLEMS: Excessive credit sales can also put a strain on a business's cash flow, as it may take longer for customers to pay their debts. This can make it difficult for the business to meet its own financial obligations and invest in growth.
ADMINISTRATIVE BURDEN: Managing a large volume of credit sales can also be administratively burdensome for a business, as it requires more time and resources to monitor and collect payments.
INCREASED RISK OF BAD DEBT: When a business extends too much credit, it increases the risk of customers defaulting on their payments. This can lead to significant losses for the business, particularly if it has not taken appropriate measures to mitigate the risk.
CASH FLOW PROBLEMS: Excessive credit sales can also put a strain on a business's cash flow, as it may take longer for customers to pay their debts. This can make it difficult for the business to meet its own financial obligations and invest in growth.
ADMINISTRATIVE BURDEN: Managing a large volume of credit sales can also be administratively burdensome for a business, as it requires more time and resources to monitor and collect payments.