The credit decision usually includes riskier customers.The credit decision should adjust for this by:

Question

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When dealing with riskier customers, the credit decision should adjust for this by determining the probability that the customers will pay and reducing the expected cash flow accordingly. This will help to mitigate potential losses and ensure that the credit decision is appropriate given the level of risk involved. Discounting the cash flows at a lower or higher rate, delaying collections, or speeding up deliveries are not necessarily effective ways to address the increased risk associated with these customers.

The Credit Decision Usually Includes Riskier Customers