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- Allowances
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- Lockbox; Bank Lockboxes; Improving Cash Flow
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- UCC 1 Perfection by Filing
- Required Areas of Knowledge for a Credit Professional
- Impact of Bad Debt Write Offs; Bad Debt Losses
- Shipping Procedures
- Improving the Effectiveness and Efficiency of the Credit Function
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Allowances
An allowance is a sales price reduction or a deduction permitted by the seller for a variety of reasons including for damages, shortages, advertising, or new store openings. Allowances usually arise from advertising contracts or promotional contracts. These allowances are also granted to customers for quality reasons in order to prevent returns.
Many allowance deductions are incurred by companies marketing goods to retail establishments. The principal way to reduce improper allowances is to educate customers on company allowance policy, the qualifications for taking the allowances, and the procedures for claiming the credit.
Source: The Dictionary of Business & Credit Terms, by Ben Berman, available at the NACM Bookstore
Also used with the permission of Credit Research Foundation.
Edited by Michael C. Dennis