Introduction
Whenever faced with a decision, an individual believes in weighing the facts in an objective manner in order to make a rational and well-informed decision. In such incidences, an individual requires careful judgment although scientists suggest that one gets influence from internal biases. Different Businesses adopt varied mechanisms to motivate their clients to clear their deals on time.
These include peaceful means where businesses men encourage customers to pay their debts, advance payments mechanism, provisions of easy payment options, and offering discounts. This paper examines judgment in various managerial contexts and attaches the insight essential in making wise decisions in management. This paper embeds positive behavior in decision making in a business situation and examines judgment especially to a business with reference to the case of Dan Miller.
Analysis
The dilemma, which Dan Miller faces, is familiar in the business arenas. Businesses have used discount policies to make customers clear their monetary deals in time. This is because the failure of clients to clear deals in time has serious repercussions on the cash flow of any business. Businesses have offered discounts to motivate customers to pay for the services they get in order to keep a smooth flow of cash (Nikolai et al., 2009). Late payments force realignment of business strategies of cash flow to prevent unnecessary financial hardships.
Although the discount policy has named advantages including prompt receipt of cash and a decrease in incidences of inappropriate debts. The act has some pros. According to Dan’s friend, the discount policy has not been an effective strategy for getting customers to pay their dues on time. This seems to be the current market situation as expressed by Dan’s friend. The introduction of discounts achieves little benefit if any in the recovery of cash owed to customers.
Companies have suffered enormous losses because of embracing the policy in anticipation of timely payments from customers. Second, the expected cash flow to the business will be extremely low. This will affect the activities of the Dan Millers dentistry business (Bazerman & Moore, 2008). The effect of Dan Miller accepting the advice by his consultant will have adverse effects on the cash flow patterns of his business. The discounted cash flow will be far much lower than what the business might have anticipated.
Third, the fears of Miller’s friend have strong foundations. Many companies have incurred massive losses because of introducing discount policies in hoping among hopes that delayed payments will have fast clearance. This has forced management of the businesses in question to go back to the devise strategies to deal with unnecessary losses. This does not only require a lot of time but also retards the progress and productivity of businesses.
Lastly, many customers do not clear their arrears even after the business grants discounts. This will make the business face financial problems at the end (Bazerman & Moore, 2008). On top of this, the introduction of discounts can encourage customers to delay payments in anticipation of discounted charges on services, which businesses render to them.
The advice from Miller’s friend may have some open assumptions. This is because this friend in question relies on a single scenario of a certain construction company. This is not adequate to give it as a precise example where discount policy has not yielded well. There are many instances where the introduction of discount policy has been effective. Businesses have reported recovery of their nefarious debts because of embracing discounts on services they offered to their clients (Goodwin & Wright, 2004). Therefore, Miller should not rely solely on his friend’s advice for the purposes of decision-making. Miller should look for the more solid ground before making any decision or step to take as a business.
There are many strategies, which Millers can adopt in order to recover money from his clients apart from the discount policy. The strategies may entail enacting policies to prevent harmful debts or legal intervention whenever customers fail to pay their debts. Businesses should set policies that do not encourage credit services. For instance, the policy should emphasize on prompt payments of any service offered to a client. Second, businesses should offer credits to customers who have a long history of honoring their pledges. This means that Miller should conduct a credit review on new and existing customers to establish their creditworthiness.
A new client who wishes to get credit services should fill an application that has guarantors or commercial credit monitors. On top of this, the new clients should be aware of terms and conditions in this credit form (Nikolai et al, 2009).
Third, Miller should explore legal interventions to recover his cash from clients who are unwilling to respond to pledges. Legal strategies entail court proceedings depending on the amount of debt. This is an effective way, which can deter other clients from failure to clear their debts (Goodwin & Wright, 2004). Lastly, Miller should look at contact with his clients and inform them that it is their responsibility to settle debts and on time. Miller should advise his clients on the need to pay for dentistry services in order to continue receiving them.
References
Bazerman, M. and Moore, D. (2008). Judgment in Managerial Decision Making. New Jersey: John Wiley & Sons.
Goodwin, P, and Wright, G. (2004). Decision Analysis for Management Judgment. New Jersey: John Wiley & Sons.
Nikolai, L, et al. (2009).Intermediate Accounting. New York: Cengage Learning.