Answering Trade Receivables Scenario Based Questions (SBQ)
In this lesson, we will learn a step-by-step approach to answering scenario-based questions on trade receivables. This includes learning how to identify positive and negative points in the scenario to support and justify our decisions.
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Steps to Answering Scenario Based Question
In answering a scenario-based question, we have to choose between two choices. This must be clearly stated in your answer.
We need to support our choice with three reasons obtained from the question. For each reason, we must explain why it support our decision and what benefit does it brings to the business.
Answering Trade Receivables SBQ
In a trade receivables scenario-based question, we are required to advise the business on which of the two customers it should sell on credit. For existing credit customers, which of the two customers should the business extend its credit terms.
The business should only sell on credit to customers who have a good credit rating or a reliable payment history. This helps ensure the business gets paid on time, so its cash flow will not be negatively affected by customers who pay late.
The business would prefer to give credit to customers who are profitable or have a positive long-standing business relationship. This helps to reduce the risk of customers not paying their debts.