Both external and internal factors can influence the credit policy of a company. The external factors that can affect credit policy include more customers and higher sales prices (Claassen et al., 2019). Also, nowadays, companies are forcing their customers to make payments right away instead of waiting on the customer to pay their dues, which results in late payments. The positive external factors can be favorable such that they outweigh the internal factors affecting credit policy within an organization. Furthermore, issuing credit to customers implies that the company will not get prompt payments. This means that the company will have sufficient funds that will enable it to continue its daily operations and compensate for the delayed payments. Besides, companies have to recognize that they may lose the anticipated interest on the earned money. In today’s business environment, I believe that the external factor of high customers applies. The rationale stems from the fact that most companies lend their customers money to put up the many online businesses. Small businesses may not be able to sell their products or services without immediately getting paid due to their capital base. Therefore, taking on debt means considering short-term borrowing as an ideal solution for offering credit.
Response to Crystal Foskey
Before a company can lend credit to individuals, they have to look at their ability to manage their credit. Furthermore, this is crucial in determining whether one will pay for the borrowed credit on time. Besides, another factor is what one is earning and their employees as well as details outcome. These pieces of information are crucial in determining whether the customer will pay their bill on time or not. Today’s business environments take into consideration the performance of the company. Those that have good relations and establishments with the bank show that they can be given higher amounts of credits as there are low risks of payment and on time.
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ACC317
At its core, liquidity refers to a company's ability to pay in full the amount worth the shareholder’s stock. This is essential as it ensures the company’s dividends and profits are not interfered with. Generally, the shareholders can receive a profit or loss of the money paid compared to the assets' market value based on stock surrendered.
Ramifications of Liquidation on Shareholders
When a company liquidates its assets, creditors are usually the first people to get their payments following liquidation (Pape, 2019). Only after the company's bind owners are paid can then the shareholder be considered for payment. The shareholder can also receive liquidating distributions if they have been a part of the shareholders for more than one year.
Impacts on Corporation
When a company liquidates its assets, there are chances that it might not recognize any losses or gains. This is because, in most cases, it is operating on a breakeven point. However, if the assets had appreciated value, the realized margins will be shared with the shareholders.
Response to Alfreda Whatley Bates
At its core, liquidation involves the sale of a company’s stock of the shareholders in exchange for the corporation's assets. Liquidation has impacts on both individuals and the shareholders. They are obligated to recognize that the company’s assets may have depreciated pr appreciated over time for shareholders. Therefore, they are expected to accept the outcome based on transactions. On the other hand, for the corporation, the sale of assets means offsetting the taxes before making payments to the shareholders.
References
Claessens, S., Frost, J., Turner, G., & Zhu, F. (2018). Fintech credit markets around the world: size, drivers and policy issues. BIS Quarterly Review September .
Pape, N. A. (2019). Transfer and liquidation: A critical analysis of the transfer of shares during the process of liquidation and an analysis of Sections 8 (2)(b), 15 (6) and schedule 5 of the Companies Act 71 of 2008.
