Our company focuses on sales, not profit margins. Should the credit decision
be impacted by the profit margin on a sale?
Answer: Yes, but only marginally
[no pun intended]. Profit may be realized if and when you collect the outstanding
balance if the sale had profit built into it to begin with. If the customer
never pays, it does not matter whether the margin was unusually high or unusually
low. Your first focus is on collect-ability, second how soon you can expect
payment - and down the list the profit margin on the sale itself. FYI, this
may be useful information when speaking to sales and sales management.
|