Hightech Company offers its customers credit terms of 2/10, n/30. Most customers take advantage of the...

 

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Hightech Company offers its customers credit terms of 2/10, n/30. Most customers take advantage of the cash discount, mailing their payments to arrive on the 10th day follow- ing the date of the invoice. However, Lowmart Company, Hightech's largest customer, has recently begun sending payments to arrive on the 30th day after invoice, while still taking the 2 percent discount. Hightech's collection department has been in touch with Lowmart regarding the taking of the discount outside the discount period, and Lowmart's response is that it deserves to take the discount whenever payment is made. After all, it is Hightech's biggest customer. Required: Identify Hightech's possible courses of action as well as the consequences of these actions. Hightech Company offers its customers credit terms of 2/10, n/30. Most customers take advantage of the cash discount, mailing their payments to arrive on the 10th day follow- ing the date of the invoice. However, Lowmart Company, Hightech's largest customer, has recently begun sending payments to arrive on the 30th day after invoice, while still taking the 2 percent discount. Hightech's collection department has been in touch with Lowmart regarding the taking of the discount outside the discount period, and Lowmart's response is that it deserves to take the discount whenever payment is made. After all, it is Hightech's biggest customer. Required: Identify Hightech's possible courses of action as well as the consequences of these actions.

Answer rating: 100% (QA)

One possible course of action for Hightech would be to continue to extend the 2 percent discount to ... View the full answer