MANAGEMENT

Detailed explanation-1: -Extending credit to customers can bring you increased sales, a competitive edge, and stronger customer relationships. However, you run the risk of not getting paid. The key is to stay on top of unpaid invoices so they don’t become delinquent.

Detailed explanation-2: -Terms in this set (11) What are the advantages of extending credit to customers? The advantages of extending credit are that it allows a company to compete effectively with competitors who extend credit. The additional gross profit earned from selling on account is greater than the additional costs incurred.

Detailed explanation-3: -Disadvantages of Extending Credit to Customers: As there will be delay in receipt of cash from the customers to whom the credit was extended, the company has to borrow any short-term loans and pay interest for such loans, in order to pay for the business activities.