Carlos Albizu University Lenient and Strict Protocols Response
Reply Principles of Finance Advantages and disadvantages of lenient and strict protocols for both credits and collections Reply to each Peer about their post. Advantages and disadvantages of lenient and strict protocols for both credits and collections Discussion Reply 1 Makynna: Explain the advantages and disadvantages of lenient and strict protocols for both credits and collections. The advantage of having lenient protocols for both credits and collections is the simple fact that as a company you will more than likely have better and lasting business, simply because people are more likely to set up payment plans than to have funds immediately deducted. By offering that people will see that almost as a security blanket and will be more likely to do business with you. However, on the flip side of that, when individuals have the option to possibly get extension after extension on their payments, this could ultimately cause the business to lose funds in the long run. Now when we look at the advantage of having strict protocol for both credits and collections, it is simply the fact that the business will without a doubt get their money back, much quicker than the alternative. And of course, due to this people will be much less likely to do business with a company who may not allow payment plans or payment extensions. I find that people usually go for the safer bet, and due to life being unpredictable people like the idea of a safety net. If you were the office manager of small physician’s office, would you have both lenient, both strict, or a combination? If I was an office manager in a small office, I would definitely lean towards strict protocols. Dealing with a smaller business, you have much less room for the possibility of unnecessary debt. We may only see 5 patients within a week, and if 3 of those 5 were unable to pay for their services, it would become immensely difficult to stay afloat in the long run. Would your position change if you were running a large hospital? Explain your reasons why Now had I been an office manager at a large hospital, I would definitely be more lenient. Not only would we be seeing hundreds of patients, these patients are also getting much more serious procedures done, in which they cannot pay for so abruptly. Melicher, R, & Norton, A. (2017). Introduction to finance: Markets, investments, and financial management (16th ed.) John Wiley & Sons, Inc. Advantages and disadvantages of lenient and strict protocols for both credits and collections Discussion Reply to Yanira: Hello All, For this week's discussion, we’ll be discussing the advantages and disadvantages of lenient and strict protocols for both credits and collection. If I was an office manager, which one would I establish? If I was working for a large hospital, would it be different if I was running a large hospital? Lenient is an established policy that sells credit to customers whose credit is unknown and solvency or questionable. It does benefit the company by being able to promote its business and make some type of profit out of the sale. Disadvantages could be the business financially if the creditor is not reliable and pay their dues on time. This could be affected tremendously by small companies that don’t have a lot of patient traffic. Oppose to a big hospital, who can afford to negotiate poor creditors or people who don’t have established credit records. I would choose a lenient protocol if I were running a small facility, it gives the company an option to promote and grow their business in a positive outcome. I would even offer my terms payback agreements. Perhaps the low-interest rate and short term payback within 6-12 months. For a hospital, I would make it a combination of both, since the hospital has significant revenue and more patient care availability. Which will prevent the hospital from losing money. References Melicher, R., & Norton, A. (2017). Introduction to Finance: Markets, investments, and financial management (16th ed.). John Wiley & Sons, Inc. Advantages and disadvantages of lenient and strict protocols for both credits and collections Discussion Reply to Rylee: HelloProfessor Armas & Class, Every small-business owner needs to decide whether it is in his/her best interest to start taking customer payments on a credit basis. While dealing with cash only is certainly the easiest and quickest way to get paid for goods or services, in today’s fast-paced and electronic world many commercial customers are using credit for payments. This includes whipping out the corporate credit card or buying supplies on a monthly line of credit with vendors.Whether or not the pros and cons of a strict credit policy are worth the investment and hassle is up to you, but it's worth at least knowing the advantages and disadvantages of credit sales. Payment in different currencies. One of the advantages of a credit policy that accepts electronic forms of payment such as credit cards is that the math is already done for you (Markgraf, 2016). Currency transfer is usually quite easy, as the payment to you will be in U.S. dollars while the person making the purchase will get charged in their own currency.This makes it easier to accept payment from people in foreign countries or visiting tourists. Ease of use. Using electronic forms of credit are extremely easy these days with the advent of such point-of-sale technologies as Square and Apple Pay. For services such as Square, when you sign up the company will supply you with a point-of-sale card reader that can be set up very quickly. Also, with phone apps such as Venmo, Zelle, and countless others that allow instant online payment transfer, the days of needing a cash register are long gone. Customers more likely to spend more. Studies show that people are much more prone to overspending and making impulse purchases when they have a form of credit in their wallets as opposed to a wad of cash. Psychologically, it’s much more difficult to watch cash disappear.While some customers will always prefer to deal with cash, one of the advantages of a credit policy is that you open yourself up to a whole demographic of customers who will be more willing to pay for your goods and services if you accept credit (Markgraf, 2016). Convenient recordkeeping. That paper trail you’ve been trying to keep on your customers becomes much easier when you have an itemized list of credit transactions your bank can provide on monthly statements (Markgraf, 2016). When it comes time to balance the books and pay taxes, most customer transactions done through a bank can be easily downloaded to financial programs such as QuickBooks and FreshBooks. Disadvantages. Late paying customers/patients, collection fees, accounts receivable management, Whether I was a manager of a small physician's office vs. A hospital, my choice to have a combination would not change. Extending credit to customers seems like a no-brainer since it can be a great way to attract customers and build profitable, long-term relationships with them. Ofcourse, there are great risks when extending credit, however, there are ways you can mitigate those risks. Some of the ways you can make smarter choices about credit sales is by running credit checks, requiring new customers to fill out credit applications, developing a credit policy, and utilizing accounts receivable management best practices and tools to help make the collections processes quick and effective (Markgraf, 2016) Reference: Markgraf, B. (2016, October 26). Advantages & Disadvantages of a Liberal Credit Policy. Retrieved June 24, 2020, from https://smallbusiness.chron.com/advantages-disadva...
