The option that will not help minimise potential losses resulting from credit customers is:

Extended payment period

Explanation:

1. Cash on Delivery: This method ensures that the payment is made at the time of delivery, thus eliminating the risk of non-payment.

2. Letters of Credit/Bank Guarantees: These are financial instruments that guarantee the payment to the seller. If the buyer fails to make the payment, the bank will cover the amount, thus reducing the risk of loss.

3. Bank/Supplier References: These references provide information about the creditworthiness of the customer. If the references are positive, it indicates that the customer is likely to make the payment on time.

4. Extended Payment Period: This method actually increases the risk of potential losses. The longer the payment period, the higher the risk that the customer will not pay. It ties up the seller's capital for a longer period and increases the chance of default.

Question

The option that will not help minimise potential losses resulting from credit customers is:

Extended payment period

Explanation:

1. Cash on Delivery: This method ensures that the payment is made at the time of delivery, thus eliminating the risk of non-payment.

2. Letters of Credit/Bank Guarantees: These are financial instruments that guarantee the payment to the seller. If the buyer fails to make the payment, the bank will cover the amount, thus reducing the risk of loss.

3. Bank/Supplier References: These references provide information about the creditworthiness of the customer. If the references are positive, it indicates that the customer is likely to make the payment on time.

4. Extended Payment Period: This method actually increases the risk of potential losses. The longer the payment period, the higher the risk that the customer will not pay. It ties up the seller's capital for a longer period and increases the chance of default.

Knowee AI · Accepted Answer

The option that will not help minimise potential losses resulting from credit customers is:

Extended payment period

Explanation:

1. Cash on Delivery: This method ensures that the payment is made at the time of delivery, thus eliminating the risk of non-payment.

2. Letters of Credit/Bank Guarantees: These are financial instruments that guarantee the payment to the seller. If the buyer fails to make the payment, the bank will cover the amount, thus reducing the risk of loss.

3. Bank/Supplier References: These references provide information about the creditworthiness of the customer. If the references are positive, it indicates that the customer is likely to make the payment on time.

4. Extended Payment Period: This method actually increases the risk of potential losses. The longer the payment period, the higher the risk that the customer will not pay. It ties up the seller's capital for a longer period and increases the chance of default.

Which of the following will not help minimise potential losses resulting from credit customers? Group of answer choices Cash on delivery Letters of credit/bank guarantees Bank/supplier references Extended payment period

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