Scott Pales - In very high concentration situations, where one buyer might represent...

In very high concentration situations, where one buyer might represent 30 percent, 40 percent of sales or even more, it just doesn't make accounting sense to set reserves at the level otherwise called for based on the size of the receivables. So some financial officers are simply avoiding the issue, accepting these potentially company-killing credit risks as unavoidable, somehow taking solace in the fact that if the 800-pound gorilla goes down, it will be catastrophic not just for their company, but their competitors as well.

Scott Pales

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Scott Pales Quotes

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In very high concentration situations, where one buyer might represent 30 percent, 40 percent of sales or even more, it just doesn't make accounting sense to set reserves at the level otherwise called for based on the size of the receivables. So some financial officers are simply avoiding the issue, accepting these potentially company-killing credit risks as unavoidable, somehow taking solace in the fact that if the 800-pound gorilla goes down, it will be catastrophic not just for their company, but their competitors as well. Scott Pales

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Keywords

high concentration situations buyer represent percent sales make accounting sense set reserves level called based size receivables financial officers simply avoiding issue accepting potentially company-killing credit risks unavoidable taking solace fact 800-pound gorilla catastrophic company competitors

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