Final answer:
Proper credit-checking procedures include completing a credit check for a new guest, establishing credit checking rules before offering credit, and understanding a credit sale isn't final until the money is collected. In finance, checks include income verification, past borrowing history, and possibly requiring a cosigner or collateral as security.
Step-by-step explanation:
Appropriate credit-checking procedures include several actions. Firstly, a credit check should always be completed for a new guest, to ensure they have a history of paying back debt responsibly. Secondly, it is important that credit checking procedures are established before extending credit to lay out clear guidelines on how to assess a borrower’s creditworthiness. Finally, it is a typical business understanding that a credit sales transaction is not complete until the cash from the sale is collected. This often necessitates monitoring an account to ensure payment is received, and taking action if payment is delayed or not forthcoming.
In the context of a financial capital market, the process often includes requiring a prospective borrower to provide income sources, conducting a credit check on their past borrowing, potentially requiring a cosigner or collateral as additional securities. For example, when using a credit card for transactions, the credit card company makes an immediate transfer of funds to the seller, making the card essentially a short-term loan that users need to repay at the end of the month.
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