After reviewing a customer’s credit application, the credit department may conclude that it has no interest in providing any type of credit to a prospective customer. If the customer is not willing to provide either cash in advance or some form of security, there may be no further avenue for the company to make a sale.
Even if the company itself cannot grant credit, it is possible that a distributor will have a looser credit policy. If the company has a distribution network, refer the customer to a distributor. This approach can indirectly result in a sale for the company, though of a lesser size than it would have experienced with a direct sale (due to the distributor commission or markup). Nonetheless, if the credit department considers a customer to have significant credit risk, this may be a viable alternative.