What is a typical procedure for processing sales orders from new customers or customers making a purchase that causes their credit limit to be exceeded?

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When processing sales orders from new customers or customers making a purchase that causes their credit limit to be exceeded, specific authorization must be granted by the credit manager. This ensures that the creditworthiness of the customer is evaluated before the sale is approved, reducing the risk of bad debt for the company. General authorization given to sales clerks can result in uncontrolled credit extensions and increased bad debts. Rejecting the sale outright can also result in lost sales opportunities. Ordering a credit report from a credit bureau may be necessary in some cases, but it is not a typical procedure for all sales orders.

What Is a Typical Procedure for Processing Sales Orders from New