Question

Tutoring Service Moss Academy offers academic hlp for emelmetary, middle and high school children, The business provides supplies needed as apart of the tutoring service monthly fee:

Describe how you plan to structure extension of credit to your customers to ensure the most protection for your company in the event the customer falls behind on payments or files for bankruptcy. Assume that your business will offer some type of credit arrangements even if you do not have plans to offer the credit option.

Answer 1

To protect a business when extending credit, it's essential to conduct credit checks, require a cosigner, and request collateral. These measures provide security against defaults and bankruptcy.

Step-by-step explanation:

Extending credit to customers in a responsible and secure manner involves implementing strategies that protect the business in case of customer non-payment or bankruptcy. A business can structure credit extension by incorporating several protective measures:

• Credit checks to evaluate the payment history and creditworthiness of potential customers.
• Requiring a cosigner, a third party who agrees to fulfill the debt obligations if the primary debtor fails to pay.
• Asking for collateral, which could be seized and sold to recover the debt if the customer defaults.

All these measures provide layers of protection and help minimize the financial risk associated with credit accounts, ensuring the longevity and profitability of the business.