Business Documents

What does Credit mean? Credit means giving the goods to the customer now but not requiring payment until sometime after delivery, e.g. 1 month

Selling Goods On credit Seller must decide: Will I give the customer credit? Will I require payment before, when, or after goods are delivered?

Why would a seller give credit? Customer can’t afford to pay for the goods until they have sold them It should increase their sales and therefore their profits

Creditworthiness Are customers good at paying back what they owe? This is called Creditworthiness How could we find out customers are credit worthy?

Creditworthiness Ask for a bank reference from the customer Ask for a trade reference (dealings with other businesses) from the customer Look at the customer’s accounts

Creditworthiness