Question

In: Accounting

how is a credit check in the advanced technology system fundamentally different from a credit check...

how is a credit check in the advanced technology system fundamentally different from a credit check in the basic technology system?

Solutions

Expert Solution

Credit check done in basic technology system is very different from the same done in advanced technology system.
1- In basic technology, credit check is done by the Credit department which work in accordance with company's credit policies whereas in advanced technology system, the System Logic does the decision making.
2- In basic technology, the credit check is dependent on the organization, it's relationship with its customers and the level of materiality of the transaction whereas in advanced technology system, Customer's credit history serves as the base for making credit decision and it's relationship with the organization is irrelevant to the system.
3- There is human factor involved in basic technology system, whereas in advanced technology, human factor is absent and if system denies credit based on customer's credit history then the decision is Final and cannot be changed by another clerk.


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