Company Case Study Cherokee's Chocolates

By checking potentials customer’s history and information it will help prevent bad debts in near future. If L Brown had a thorough credit check, Chloe may have found that he was financially unstable to pay his debts off. But Chloe has allowed L Brown to purchase on credit nonetheless, and it says that Chloe has even allowed him to purchase more chocolates when he hadn’t payed off his previous amount from 2 months ago. His debts have now accumulated to $9,500 and Chloe was forced to write if off as a bad debt as L Brown has filed for bankruptcy. This now means that Chloe’s Chocolates have lost the money that L Brown was meant to pay off therefore decreases their profit remarkably. In these cases, Chloe should learn from her mistake and to prevent …show more content…
This should mean a credit limit for customers, so there isn’t a higher amount of cash they have to write off as bad debts. Chloe’s credit customers currently owe $55,559, this is more than what they currently owed her last month which was only $49,220. In order for Chloe’s Chocolates to keep this figure down low they need to enforce on the credit policies for all customers and make sure they pay on time or as soon as possible. By doing so this will therefore encourage them to pay off their debts resulting in a more sufficient amount of cash flow for Chloe’s Chocolates. This will help Chloe’s Chocolates when they want to expand as they would have a higher profit due to the amount of cash flow …show more content…
Madd who has paid their full balance owing at the start of the month. Debtors such as S. Madd who pay their debts off in time can be assured that they will help Chloe’s Chocolates expand the business. Chloe can therefore trust this debtor and S. Madd can be expected to have a higher credit limit than other credit customers. However on the other hand some debtors are not as trustworthy for example G. Best, who had a remarkably high amount to owe which was $18,700. Since Chloe does not have any credit limits, G. Best has therefore purchased more chocolates which has totalled to $21,276. This is a large amount of cash for G. Best to pay off to Chloe’s Chocolates. Debtors such as G. Best need to have a credit limit on their credit purchases, this will encourage them to pay off their debts before they are allowed to purchase any more chocolates on credit. This will be a great advantage to Chloe’s Chocolates as owing balances will not be so high and she doesn’t have to write off as many bad debts in the future. This will help prevent more bad debts written off and therefore less profit for the business which won’t reach Chloe’s goals of expanding her