Question：Mindanao Co supplies computer peripherals to a large number of service sector customers. Distant Lands Co, a family owned chain of travel agents, has just exceeded its credit limit and is overdue.

　　It currently has a large order that has been produced and is awaiting despatch. Mindanao is currently trying to reduce its level of bad debts, but wishes to continue its trading relationship with Distant Lands.

　　Which of the following approaches should it pursue in this case?

　　A. Stop the order and place the account with a debt collection agency.

　　B. Despatch the order and send a representative to discuss the problem with Distant Lands' Sales Director.

　　C. Agree a payment schedule with the Finance Director of Distant Lands, and agree to despatch the order when payment amounting to 50% of the balance outstanding has been received and has cleared the bank.

　　D. Despatch the order on receipt of a cheque in settlement of that order, and continue to chase for payment for the remaining money outstanding.

　　The correct answer is: Agree a payment schedule with the Finance Director of Distant Lands, and agree to despatch the order when payment amounting to 50% of the balance outstanding has been received and has cleared the bank.

　　解析：The level of debt will be reduced before the order is despatched, and Mindanao will be able to go back to the Finance Director of Distant Lands in the event of further payments falling behind schedule.

　　Despatching the order on receipt of a cheque in settlement of that order and continuing to chase payment for the money is a high-risk option since the additional goods would be despatched before the cheque had been cleared through the banking system. Mindanao risks increasing the level of debt still further while making no progress on ensuring its eventual collection.

　　Stopping the order and placing the account with a debt collection agency is the safest option with regard to ensuring collection of the debt. However, it may do irreparable damage to the trading relationship with Distant Lands. Further, Mindanao has already incurred the cost of manufacturing the new order which may now have to be written off.

　　Despatching the order and sending a representative to discuss the problem with Distant Lands' Sales Director is unlikely to be effective in securing settlement of the existing debt since the Sales Director is unlikely to have responsibility for either purchasing or payment of suppliers.

　　At the same time, it will increase rather than reduce the level of indebtedness.