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Credit Laws and Ethics Quiz

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Questions and Answers

What is the safest guideline for credit professionals during informal meetings after industry credit meetings?

To provide detailed information about upcoming credit decisions
To discuss future plans with caution
To limit conversations to past events and refuse to talk about the future (correct)
To share credit limits and changes based on past performance

What is the recommended approach for giving trade references?

To provide a detailed verbal reference
To discuss credit limits and changes based on past performance
To refuse to supply references at all
To provide a bare bones written reference in return for a written request (correct)

What is the potential problem for credit professionals during industry credit meetings?

Lack of attendance
Being too cautious
Not having enough information
Breaking the law (correct)

What is a good reason for participating in an industry credit group?

To stay alert of customers in financial difficulty (B) Signup and view all the answers

What can happen when a customer gets into financial difficulty?

They pick and choose whom to pay (A) Signup and view all the answers

What is the risk of not performing annual credit reviews on customers with good paying habits?

Not knowing if the customer has deteriorated financially (C) Signup and view all the answers

What is the danger of reasoning that, since your product has high margins, you can afford to not get paid for one shipment?

Preferences are not taken into account (A) Signup and view all the answers

What is a bustout?

A situation where a customer closes its doors and disappears leaving unpaid creditors behind (C) Signup and view all the answers

What are unclaimed property laws also known as?

Escheat laws (C) Signup and view all the answers

What do some credit professionals do with credit balances instead of researching them?

Ignore them and keep them as miscellaneous income (A) Signup and view all the answers

Why are unclaimed property laws becoming a prime target for states?

To generate income (A) Signup and view all the answers