Page 519 - Business Principles and Management

project:
MY BUSINESS , INC.

Credit and insurance decisions are important for every business. New
businesses in particular should consider whether to accept credit and
which credit system to use. They should also study the types of insurable
and noninsurable risks the business will likely face. In this project seg-
ment, you will study and determine credit policies and insurance needs
for your company.

DATA COLLECTION
1. Visit a bank and determine the differences between the credit and
debit cards that the bank offers. Identify the cost to a business to
accept each type of card from customers. Determine what infor-
mation the bank will need from a new business to decide whether
it will give the business approval to accept credit and debit cards.
2. Obtain a credit application from a business. Review it and determine
what information the business collects from the form. Categorize the
information according to the four Cs of credit.
3. Interview an insurance agent to determine the types of insurance cov-
erage available for small businesses, the protection provided, and the
cost of each type of insurance.
4. Review newspapers for several days and identify the types of risks
and reported losses suffered by businesses. Identify which compa-
nies appeared to be insured and which were not.

ANALYSIS
1. Many small businesses are beginning to accept debit cards in the
same way they accept cash but do not accept credit cards. Decide
whether you will accept debit or credit cards for purchases in your
business or operate on a cash-only basis. Develop a written justifica-
tion for your decision, then develop one or more policy statements
for the business based on your decision.
2. Consider the procedures you will follow to collect receivables from
customers who do not pay their accounts on time. List the steps you
will follow to attempt to collect. What action will you take if the
account proves to be uncollectible? Write two collection letters you
would send to customers at the end of 30 days and at the end of
60 days if the account is unpaid.
3. Design a spreadsheet or database for keeping your customers’ credit
and payment data. Determine the types of information you need
to maintain and label the columns according to the data they will
contain.
4. Make a list of each type of insurance you believe you will need to
carry on your business. Identify the amount of insurance you will
carry, the estimated annual cost of each policy, and the company or
insurance agent you plan to use to purchase the insurance.
5. Make a list of five uninsurable risks you believe your business will
face. For each, describe what you will do to minimize the negative
impact on your business.

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