Customer additional credit to process the outstanding order

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Reference no: EM131094636

You are the manager of the Accounts Receivable department in your company and responsible for monitoring customer payments and their credit limits. You get a call from a salesman questioning why an order from one of his customers was rejected. When you research the issue in your subsidiary ledger, you find out that the customer has a long history of delinquent payments, is currently at their credit limit and is also 60 days past due on their most recent invoice. When you explain this to the salesman, he gets irate and demands that the customer’s credit be extended “because the owner of this company is a good friend of the mayor and can get us government contracts worth a lot of money.” Comment on the ethics of the salesman in making the request for additional credit and using the concepts in the textbook, comment on the internal controls in place. Should you give the customer additional credit to process the outstanding order? What could the impact be if the customer is allowed to place another order?

Reference no: EM131094636

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