Making a sale to customer who are already behind in making the payments on account is a threat. Rena is making a credit sale to Sara, a customer who is already six months behind in making payments on his account. What internal control procedure(s) would provide protection against these threats?
Making a sale to customer who are already behind in making the payments on account is a threat. Rena is making a credit sale to Sara, a customer who is already six months behind in making payments on his account. What internal control procedure(s) would provide protection against these threats?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Making a sale to customer who are already behind in making the payments on account is a threat. Rena is making a credit sale to Sara, a customer who is already six months behind in making payments on his account. What internal control procedure(s) would provide protection against these threats?
Expert Solution
Step 1
Internal control procedure(s) would provide protection against these threats:
- Establish a relationship
- Ensure your invoice is sent out as soon as possible
- Make sure your payment conditions are clear
- Billing can be automated
- Optimize your debt collecting process
- Know who your clients are
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