‭Midterms: FNM105:Credit and Collection‬

‭ eographic Considerations‬
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‭Lesson 6: Terms and Dating‬ ‭In‬ ‭a‬ ‭number‬ ‭of‬ ‭instances,‬ ‭the‬ ‭seller‬ ‭recognize‬ ‭the‬
‭distant‬ ‭location‬ ‭of‬ ‭the‬ ‭buyer,‬ ‭and‬ ‭accordingly‬ ‭make‬ ‭a‬
‭concession in the matter of terms.‬
‭Definitions‬
‭ his‬ ‭may‬ ‭be‬ ‭represented‬ ‭by‬ ‭an‬ ‭extra‬ ‭30‬ ‭days‬ ‭time‬ ‭in‬
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‭ ERMS‬ ‭-‬ ‭a‬ ‭time‬ ‭element,‬ ‭which‬ ‭involves‬ ‭the‬
T ‭which‬ ‭to‬ ‭pay‬ ‭the‬ ‭bill,‬‭or‬‭by‬‭allowing‬‭a‬‭longer‬‭period‬‭for‬
‭determination‬ ‭as‬ ‭to‬ ‭when‬ ‭payment‬ ‭shall‬ ‭be‬ ‭made‬ ‭is‬ ‭the taking of business.‬
‭generally‬ ‭governed‬ ‭by‬ ‭the‬ ‭terms‬ ‭of‬ ‭sale,‬ ‭commonly‬
‭referred to and indicated on bills or invoices.‬ ‭ easonal Dating‬
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‭-‬ ‭indicates‬ ‭when‬ ‭payment‬ ‭is‬ ‭due‬‭for‬‭sales‬‭made‬ ‭The‬‭regular‬‭terms‬‭of‬‭trade‬‭usually‬‭apply‬‭to‬‭shipments‬‭of‬
‭on account.‬ ‭orders received for delivery at once.‬

‭ ATING‬ ‭-‬ ‭the‬ ‭time‬ ‭of‬‭payment‬‭is‬‭extended‬‭on‬‭account‬

D ‭ owever,‬ ‭in‬ ‭many‬ ‭lines‬ ‭of‬ ‭a‬ ‭seasonal‬ ‭nature,‬ ‭it‬ ‭is‬
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‭of certain circumstances or contingencies.‬ ‭necessary to place so-called advance orders,‬
‭that is, orders for later‬
‭ EGULAR‬ ‭TERMS‬ ‭-‬ ‭usage‬ ‭as‬ ‭well‬ ‭as‬ ‭custom‬ ‭over‬ ‭a‬
R ‭delivery, to coincide with‬
‭long‬ ‭span‬ ‭of‬ ‭years‬ ‭have‬ ‭contributed‬ ‭to‬ ‭the‬ ‭the market demand.‬
‭establishment‬ ‭in‬ ‭the‬ ‭various‬ ‭trades,‬ ‭sets‬ ‭of‬ ‭terms‬
‭peculiar to each.‬

‭ ack of Uniformity‬
L ‭ erms in Retail Trade‬
‭As‬ ‭a‬ ‭matter‬ ‭of‬ ‭business‬ ‭practice,‬ ‭however,‬ ‭one‬ ‭is‬
‭constrained‬ ‭to‬ ‭note‬ ‭every‬ ‭little‬ ‭uniformity‬ ‭in‬ ‭the‬ ‭use‬ ‭of‬
‭terms.‬ ‭While‬ ‭in‬ ‭some‬ ‭trades,‬ ‭the‬ ‭cooperation‬ ‭of‬ ‭some‬
‭groups‬ ‭of‬ ‭grantors‬ ‭of‬ ‭credit‬ ‭has‬ ‭made‬ ‭it‬ ‭possible‬ ‭to‬
‭establish‬ ‭and‬ ‭accordingly‬ ‭enforce‬ ‭uniform‬ ‭terms,‬
‭nevertheless,‬‭in‬‭order‬‭trades‬‭where‬‭such‬‭cooperation‬‭is‬
‭non-existent,‬‭terms‬‭are‬‭frequently‬‭modified,‬‭not‬‭to‬‭say‬‭at‬
‭times, even disregarded.‬
‭Factors in Fixing Terms‬
‭●‬ ‭Nature and use of the commodity‬
‭●‬ ‭Location‬
‭●‬ ‭Circumstances of the customer‬
‭●‬ ‭Purpose behind the purchase‬
‭●‬ ‭Credit standing of the buyer‬
‭●‬ ‭Regulations‬ ‭enumerated‬ ‭in‬ ‭codes‬ ‭of‬ ‭fair‬
‭practices‬
‭ he Commodity as a Factor‬
T ‭Cash‬‭Before‬‭Delivery‬‭(C.B.D)‬‭-‬‭It‬‭should‬‭be‬‭made‬‭clear‬
‭It‬‭is‬‭axiomatic‬‭that‬‭products‬‭belonging‬‭to‬‭the‬‭category‬‭of‬
‭basic‬ ‭necessities‬ ‭are‬ ‭highly‬ ‭saleable‬ ‭because‬ ‭the‬
‭demand‬ ‭for‬ ‭them‬ ‭is‬ ‭almost‬ ‭universal,‬ ‭compared‬ ‭to‬
‭luxuries‬ ‭and‬ ‭non-essential‬ ‭items‬ ‭which‬ ‭has‬ ‭limited‬
‭markets.‬
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‭Most‬‭retailers,‬‭if‬‭not‬‭all,‬‭grant‬‭credit‬‭to‬‭their‬‭buyers‬‭who‬
‭continue to extend their patronage through years.‬
‭ s‬ ‭a‬ ‭common‬ ‭practice,‬ ‭though,‬ ‭such‬ ‭buyers‬ ‭are‬
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‭required‬ ‭to‬ ‭make‬ ‭a‬ ‭monthly‬ ‭payments‬ ‭to‬ ‭cover‬ ‭part‬‭of‬
‭their outstanding obligations.‬
‭ tanding of the Customer‬
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‭It‬ ‭need‬ ‭not‬ ‭be‬ ‭stressed‬ ‭herein‬ ‭that‬ ‭there‬ ‭exists‬ ‭a‬
‭correlation‬ ‭between‬ ‭the‬ ‭grant‬ ‭of‬ ‭credit‬ ‭and‬ ‭the‬ ‭time‬‭of‬
‭payment.‬ ‭Until‬ ‭such‬ ‭time‬ ‭as‬ ‭payment‬ ‭is‬ ‭made,‬ ‭credit‬
‭risk is ever present.‬
‭ or‬‭this‬‭reason,‬‭some‬‭conservative‬‭businessman‬‭refuse‬
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‭to‬‭sell‬‭goods‬‭on‬‭credit‬‭to‬‭those‬‭customers‬‭with‬‭doubtful‬
‭character- and certainly, with unknown capacity to pay.‬
‭ ash Terms‬
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‭that‬ ‭goods‬ ‭shall‬ ‭delivered‬ ‭to‬ ‭the‬ ‭buyer‬ ‭only‬ ‭when‬ ‭the‬
‭seller‬‭obtains‬‭receipt‬‭of‬‭funds‬‭corresponding‬‭to‬‭value‬‭of‬
‭goods‬ ‭ordered.‬ ‭Applies‬ ‭specifically‬ ‭in‬ ‭which‬ ‭the‬ ‭seller‬
‭receives‬‭the‬‭cash‬‭payment‬‭as‬‭a‬‭condition‬‭to‬‭delivery‬‭of‬
‭goods.‬

‭ ftentimes,‬‭to‬‭spark‬‭sales‬‭of‬‭luxuries‬‭and‬‭similar‬‭others‬
O ‭ ash Terms‬
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‭discounts‬ ‭are‬ ‭at‬ ‭times‬ ‭offered‬ ‭as‬ ‭well‬ ‭as‬ ‭credit‬ ‭terms.‬ ‭cont.‬
‭Furthermore,‬‭piano,‬‭household‬‭appliances‬‭are‬‭offer‬‭sold‬ ‭Cash‬ ‭On‬‭Delivery‬‭(C.O.D.)‬‭-‬‭most‬‭common‬‭practice‬‭in‬
‭on‬ ‭installment‬ ‭basis‬ ‭which‬ ‭cover‬ ‭long‬ ‭periods‬ ‭of‬ ‭business transactions.‬
‭payment.‬
 ‭The‬ ‭system‬ ‭of‬ ‭paying‬ ‭for‬ ‭goods‬ ‭when‬ ‭they‬ ‭are‬
‭ elivered, (investopedia)‬
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‭“CASH ON DELIVERY - NOW AVAILABLE‬‭”‬

‭Other Terms‬
‭●‬ ‭End‬ ‭of‬ ‭Month‬ ‭-‬‭this‬‭arrangement‬‭springs‬‭from‬
‭the‬‭need‬‭of‬‭the‬‭active‬‭buyer‬‭for‬‭convenience‬‭in‬
‭making‬‭payments,‬‭and‬‭from‬‭the‬‭desire‬‭of‬‭sellers‬
‭to encourage the concentration of business.‬
‭●‬ ‭Discounts‬‭-‬‭a‬‭deduction‬‭from‬‭the‬‭usual‬‭cost‬‭of‬
‭something,‬ ‭typically‬ ‭given‬ ‭for‬ ‭prompt‬ ‭or‬
‭advance‬ ‭payment‬ ‭or‬ ‭to‬ ‭a‬ ‭special‬ ‭category‬ ‭of‬
‭buyers.‬

‭ ash and Trade Discounts‬‭(10% OFF)‬

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‭Cash‬ ‭Discount‬ ‭-‬ ‭a‬ ‭deduction‬ ‭allowed‬ ‭by‬ ‭the‬ ‭seller‬ ‭of‬
‭goods‬‭or‬‭by‬‭the‬‭provider‬‭of‬‭services‬‭in‬‭order‬‭to‬‭motivate‬
‭the customer to pay within a specified time.‬
‭“SAVE $ SAVE $ PAY CASH SAVE 7C Per Gallon”‬
‭Trade‬ ‭Discount‬ ‭-‬ ‭an‬ ‭amount‬ ‭or‬ ‭rate‬ ‭by‬ ‭which‬ ‭the‬
‭catalog,‬ ‭list,‬ ‭or‬ ‭retail‬ ‭price‬ ‭of‬ ‭an‬ ‭item‬ ‭is‬‭reduced‬‭when‬
‭sold‬ ‭to‬ ‭a‬ ‭reseller.‬ ‭The‬ ‭trade‬ ‭discount‬ ‭reflects‬ ‭the‬
‭reseller's‬ ‭profit‬ ‭margin‬ ‭and‬ ‭usually‬ ‭varies‬ ‭directly‬ ‭with‬
‭the quantity of the item‬
‭purchased.‬
‭“QUANTITY DISCOUNT WHOLESALE”‬