Handling returned goods and bad debts is a greater administrative problem for firms that pay salespeople using a commission plan than for firms that pay straight salaries.

Question

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Firms that pay salespeople through commissions face administrative issues when it comes to customers with debt problems or returns. A salesperson may have sold a product to a customer who is unable to pay or goes bankrupt. If the salesperson is not directly responsible for the extension of credit to accounts, most firms will not withdraw a commission. The same is true for sales returns.

Handling Returned Goods and Bad Debts Is a Greater Administrative