The scenario:

You are the senior manager of an accounts receivable department in a medium-sized company selling specialty metals such as titanium, tungsten, and magnesium to manufactures. Credit sales last calendar year totaled $46 million. In your opinion, credit policies and procedures seem to be functioning quite well last year the company wrote-off less than $50 thousand of bad debt (uncollectable accounts receivable).

For the past six months, you have been closely watching the account balances of one of your best customers. This customer accounts for 20% of your companys total sales. For many years, the customer has had an impeccable payment history. However, beginning about a year ago, payments began stretching out from 30 days to 40 days to 50 days and now nearly 60 days from the date of the invoice.

Yesterday, the company called in to place an order that, because of its slow payment history, would put the company in excess of its credit limit of $1 million. The staff member that took the order came to you for guidance, noting the credit limit issue but also explaining that the customer was unwilling to place a COD order. Moreover, the customer explained that this was a rush order and was willing to pay extra for expedited shipping.

The exercise:

What advice would you give this staff member?

What are the advantages and disadvantages to fulfilling this order?