Results of excessive credit sale in business.

[Axis]

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.

 

[TOZZIBLINKZ]

Personally in my own view and perspective there is absolutely nothing wrong for a business owner to issue credit sales of its goods and services to customers and clients and in fact that is considered to be one of the most effective ways to make sure that you win potential customers and clients who are ready to do anything for your business to survive. At times clients and customers may not have money at the moment but desperately in need of the products or services in which you sell and render, offering to help them by issuing credit sales to them of the goods and services in which you render or sale wouldn't be a bad idea. However you should make sure to do this professionally and not overdo it because over issuing of credit sales in the business can make a particular business to liquidate or become bankrupt unawarely.

The business owner or business manager must definitely keep track of individuals as well as business owners in which he or she must have issued credit sales to so as to go back to them whenever the date for them to pay the money of the products as well as services in which they have borrowed a credit is due.

 

[Mikes smithen]

In as much as it is important for the business organisation to issue credit sales of its goods and services to customers and clients because that can prove out to be an effective ways to retain customers and client loyalty as well as interest to the business organisation and it is also a good way to prove that the business manager or the business owner isn't only interested in the income of his or her clients and customers but also interested in their satisfaction and compatibility with the business products. It is therefore advised that business managers and business owners should not over issue credit sales of goods and services to customer and client because doing so will bring in a whole lot of bad and negative consequences to the business existence.

First and foremost it will make it hard for the business to make profit and at times the business might even become deranged financially without the business managers and business owners even knowing.

 

[Johnson2468]

Problems with cash flow are among the most severe results of excessive credit sales. If too many consumers are permitted to purchase on credit, the company could not have enough cash on hand to pay all of its bills. Delays in making payments to suppliers, missed payments, and even bankruptcy may result from this.

The possibility of bad debt is another result of excessive credit sales. Customers that default on their obligations to the business accrue bad debt. This can have a significant impact on the company's financial health and may even result in the need to write off the bad debt as a loss.