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CHAPTER 6

Credit, Pricing and Discounts

Credit and collection

The three C’s of credit. Many products or services are purchased on a credit basis, and the salesperson should be familiar with the policies and procedures for granting it. Credit is permission to buy a product immediately and to pay for it later. Moreover, credit is a privilege, not a right, which means that the buyer is morally and legally responsible to pay for the products or services he receives.

In opening a personal credit account for the buyer the salesperson must answer the following three questions: Can the buyer pay for what she purchases? Will she pay? What amount of credit should be given?

To answer their questions the salesperson must have information about the buyer’s capital, capacity, and character, commonly referred to as the “three C’s of credit.” Capital relates to the buyer’s financial position. We need to have a picture of her assets, liabilities, and net worth. Capacity pertains to the buyer’s weekly or monthly income. And character applies to the buyer’s personal integrity, honesty, and past dependability in paying her bills. All three of these factors must be carefully analyzed to determine the buyer’s ability and willingness to pay, as well as the amount of credit she will receive.