Question 10.RQ.1: Tariq is the credit manager of Heltex plc. He is concerned t...
Tariq is the credit manager of Heltex plc. He is concerned that the pattern of monthly cash receipts from credit sales shows that credit collection is poor compared with budget. Heltex’s sales director believes that Tariq is to blame for this situation, but Tariq insists that he is not.
Why might Tariq not be to blame for the deterioration in the credit collection period?
Although the credit manager is responsible for ensuring that receivables pay on time, Tariq may be right in denying blame. Various factors may be responsible for the situation described which are beyond the control of the credit manager. These include:
● a downturn in the economy leading to financial difficulties among credit customers;
● decisions by other managers within the business to liberalise credit policy in order to stimulate sales; SOLUTIONS TO REVIEW QUESTIONS 561
● an increase in competition among suppliers offering credit, which is being exploited by customers;
● disputes with customers over the quality of goods or services supplied;
● problems in the delivery of goods leading to delays.
You may have thought of others.