Y company offers its customers credit of 2/10,n 30. Most customers take advantage of the cash discount, mailing their payment to arrive on the 10th day following the date of the invoice. However X comany, Y largest customer, has recently begun sending payments to arrive on the 30th day after invoice, while still taking the 2 percent discount. Y company colletion department has been in toch with X company regarding the taking of the discount outside the discount period ,and X company response is that it deserves to take discount whenever payment is made. After all, it is Y company biggest customer. Identify Y company possible courses of action as well as the consequences of these actions.

Question

Y company offers its customers credit of 2/10,n 30. Most customers take advantage of the cash discount, mailing their payment to arrive on the 10th day following the date of the invoice. However X comany, Y largest customer, has recently begun sending payments to arrive on the 30th day after invoice, while still taking the 2 percent discount. Y company colletion department has been in toch with X company regarding the taking of the discount outside the discount period ,and X company response is that it deserves to take discount whenever payment is made. After all, it is Y company biggest customer. Identify Y company possible courses of action as well as the consequences of these actions.

Answer 1

Sometimes it "works" stating that you'd love to do that, but it is against company policy and if it's broken for one, everyone will want to do that. They might except a "smaller" discount for being late. It would depend on how much you want to do to keep that customer.

Give someone an "inch" and they always want a "mile." It's best to adhere to company policy, saying that you'd "like" to break that rule, but you cannot. It could cost YOU your job!

Sra

Answer 2

Y company has several possible courses of action in response to X company's behavior of taking the discount outside the specified discount period:

1. Enforce the terms of the credit policy strictly: Y company can notify X company that they must adhere to the terms of the credit policy and only take the discount if payment is made within 10 days. The consequence of this action could be a strain on the relationship with X company, potentially leading to disputes or even loss of business from Y company's biggest customer.

2. Negotiate a new credit agreement: Y company could enter into negotiations with X company to revise the credit terms to accommodate their payment practices. This might involve extending the discount period or finding a compromise that works for both parties. The consequence of this action could be a more amicable relationship with X company, ensuring continued business but potentially impacting Y company's cash flow.

3. Implement stricter credit policies for X company: Y company might choose to adopt stricter credit policies specifically for X company, such as reducing the discount percentage or implementing penalties for late payment. The consequence of this action could be a strained relationship with X company and potential loss of business, but it may also encourage X company to adhere to the agreed-upon terms.

4. Seek legal advice: Y company could consult with legal counsel to explore potential legal avenues to enforce the credit policy against X company. This action could be costly and time-consuming, with uncertain outcomes. It could also strain the relationship between Y company and X company further.

Ultimately, Y company must decide which course of action aligns with its business goals and priorities, considering the potential consequences of each action on both the relationship with X company and overall business operations.