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My company is considering giving the sales department credit granting authority for new accounts for a limited dollar amount – such as $1,000. In effect, customers would be given instant credit for up to $1,000. How would you respond to this idea?

Answer: It depends. If management is truly interested in your input, I would tell them that extending credit without any credit check is a bad idea. If this is already a “done deal”, I would concentrate on documenting the bad debt losses and the dollar amount of payment delinquencies associated with this new program.

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