Chapter 8 Discussion 2 Week 5 Receivables Assignment

Chapter 8 Discussion 2 Week 5 Receivables - Assignment Example This would mean that a firm may either have to abandon its plan for a liberal credit policy or it may end up having cash flow crisis if it continues with the plan. Competitors’ actions and reactions of customers to a change in the credit policy are important. It is possible that customers may shift their business in favor of a competitor who offers the best credit terms. Credit controllers in firms should take a competitors and customers analysis to determine possible effects to a change in credit policy. The management should ensure that it adopts a policy that poses minimal risk of lost customer goodwill as well as providing a sustainable competitive advantage (Bartels, 1967). Probability of bad debts and the managements risk appetite are also a major influence of a credit policy. If the management of a company determines that there is a high risk of their credit sales becoming bad, they would probably set up a tight credit policy. Companies whose management is risk averse do not favor loose credit policies. Impact of the credit policy on turnover, profitability and liquidity should also be considered. The management should seek to maintain a balance between increasing sales and profits and maintaining liquidity at appropriate levels (Talekar, 2005). This trade-off dictates the credit policy of a firm. The company may opt to reduce the credit limits of clients who are perceived to pose a high risk. The management should carry out customer due diligence and analyses so as to assess the credit worthiness of their clients. This should be done periodically, and the management should ensure that credit limits are lowered for high risk clients. This should be done carefully so that the customer’s loyalty is not eroded. The amount of $ credit sales should be capped to a certain limit depending on the credit worthiness assessment. The management may seek to use third parties

Judicial activism of the European Court of Justice Essay

Judicial activism of the European Court of Justice - Essay Example In spite of this, the ECJ tends to take a cautious approach in adopting the policy. It is worth noting that the ECJ has a constant need to develop general principles for procedural purposes, which can sometimes be interpreted as activism (Kelly 315). Unlike federal states, there is no hierarchy relation between European community laws and national laws. Therefore, these two sets of laws coexist in the European judicial environment. As such, there is a need for certain comprehensive principles to resolve problems arising from conflict between these two sets of laws and the ECJ took up this boundary-pushing duty of setting up principles such as the direct effect and primacy. The EU Treaty does not assign the ECJ federation duties and its assumption of this role can be interpreted as judicial activism (Kelly 315). Member states, institutions and individuals in the EU are bound by the constitutional principles developed by the ECJ when they act within the community. In a series of decisi ons, passed in the 1960s and 1970s, the ECJ established doctrines that have served as precedents of a theory of legal intervention into the relationship between Member States and the Community. In an apparently activist approach, the ECJ held that the provisions of the Treaty could have a direct effect in its ruling on the 1963 Van Gend en Loos case. This essentially means that individuals and private citizens could sue national governments in the national courts for failing to enforce the Treaty. In its declaration, the ECJ stipulated that the Treaty is superior to an agreement that creates mutual obligations between contracting states insisting that the Community constitutes a new legal order of international law limiting the sovereignty of states within limited fields (Abels and Joyce 59). In the case of Costa v. ENEL, the ECJ established the supremacy doctrine meaning that state transfers of legal powers were irreversible and permanently limited their sovereign rights. In its ru ling, the ECJ decreed that the EEC treaty was no ordinary international treaty and had its own legal system which upon enforcement of the Treaty became an integral part of the legal systems of Member States and their courts were bound by the system. It further stated that the creation of a community of unlimited duration, with its own institutions, personality, legal capacity, capacity of representation on the international plane and most importantly, real powers limiting sovereignty of Member States or the transfer of power from the states to the Community, members had effectively limited their sovereign rights, within limited fields, creating a body of law binding their nationals and themselves(Abels and Joyce 59). In the Francovich case, the court resolute that the failure of Member States to swap orders amounts to a breach of Community law and as such were obliged to compensate harm suffered by individuals. The court in its ruling held that the complete efficiency of Community r ules would be compromised, and the protection of the rights they grant weakened if individuals were denied redress when their rights were infringed by violation of Community law for which a Member State was responsible (Dougan 157). The ECJ developed the preemption doctrine in a series of cases. This doctrine implied that