Office Products Depot Case Study

Register to read the introduction… Office Products Depot offers credit to a lot of their customers, as only 3% of their sales are cash. This means that allowing customers to purchase on credit greatly increase sales and therefore profits, that is, only when the customers pay them for their goods. Therefore, when offering credit to its customers, Office Products Depot first checks the credit rating of the customer to identify if the customer will pay for goods they have purchased, and if they are likely to get their payment. This credit check will look at the customer’s previous transactions and payments, and also if they have any existing bad debts. For new small businesses wanting credit, a preprinted form is given to them to fill out to apply for credit. However for large companies, such as Trust Power, they are referred to a manager. For example, a manager would be allocated to communicate with Mount Maunganui College, as they have an existing account balance of $12,000. Whereas, United Ltd is a new customer, with a balance of $230. Therefore they communicate with a normal salesperson. By allocating these managers to negotiate directly with these large companies, Office Products Depot is able to create a personal relationship with these businesses, improving their experience with Office Products Depot. By providing this close …show more content…
However, more invoices will be sent if the customer is not paying or if they claim that they didn’t receive the original invoice. These invoices are sent out electronically to each customer, as it makes it easier to manage transactions rather than doing it manually. Office Products Depot can only hope that the customer will pay, they cannot physically force the customer to pay, as it will result in a loss of business. This keeps the customer happy with the business as they are not being pestered to pay. By improving this relationship with each particular customer, it makes them more likely to pay on time, and more likely to buy from Office Products Depot in the future. Payments by direct debit are recorded every morning on electronic bank statements. These payments are then checked with the customer’s account to ensure that the correct amount has been recieved. Cash and EFTPOS payments are reconciled with the account of the customer at the end of the business day, to ensure that all is correct. However, cheques go straight into the account before they are checked by the bank. This allows some businesses to take advantage of the processing time while the banks authorise the cheque, by providing an invalid cheque to pay for their account. If a customer chooses to return any products, Office Products Depot issues a credit note to that particular customer for the return of the goods purchased. The return will be