1. Design a form for Mrs. Spend A Lot to complete before you allow her to purchase from your store on credit. You might like to include questions on the following: Where she is employed; how long she has been employed in her present position; what her salary is; with which other stores she has accounts, etc.

2. When you examine the information Mrs. Spend A Lot has entered on the form, you discover she has numerous other accounts. She is already paying 60 percent of her "take home" salary towards repaying debt. She is keen to purchase a R40,000 dining room suite. It is the last working day of the month, and your business has not met its target sales for the month. The firm is R35,000 under target. This sale will enable the target to be met. If you allow this sale to go through, then the salespeople will all get their bonuses for meeting their target. What will you do as the credit controller? Will you allow Mrs. Spend A Lot to purchase on account, or will you decline her application? You must fully explain your choice of answer.

To address this scenario, we'll first consider creating a form for Mrs. Spend A Lot to evaluate her creditworthiness. Then, as a credit controller, we'll decide whether or not to approve her credit application.

1. Designing the Credit Application Form:

To design a credit application form for Mrs. Spend A Lot, you should include fields that gather comprehensive information to assess her ability to manage debt. Here are some essential components:

Personal Information:
- Full Name
- Address
- Phone Number
- Email Address
Employment Information:
- Current Employer
- Job Title
- Length of Employment at Current Job
- Monthly Gross and Net Salary
Financial Obligations:
- List of Existing Accounts with Other Stores (including limits and outstanding balances)
- Current Monthly Debt Repayments
Consent and Declaration:
- Permission to perform a credit check
- Signature and Date

2. Analyzing the Situation:

Upon examining the information provided by Mrs. Spend A Lot, we notice several critical financial factors:

She already uses 60% of her take-home salary to pay existing debts.
She wants to add a R40,000 dining room suite to her credit, which will increase her financial burden.

Decision as a Credit Controller:

As the credit controller, the responsible action is to decline Mrs. Spend A Lot's credit application for the following reasons:

Financial Burden: Given that Mrs. Spend A Lot is already dedicating 60% of her net income to debt repayment, adding another substantial purchase could significantly strain her financial situation, potentially leading to defaulting on payments.
Ethical Responsibility: While meeting the monthly sales target is important for business and bonuses, extending credit to a customer who cannot comfortably afford more debt does not align with responsible lending practices.
Risk Management: Protecting the store from risky credit extensions is crucial to maintaining financial stability and avoiding potential losses.

In summary, while allowing the sale might benefit the company and employees in the short term, exercising caution and adhering to sound credit policies ultimately serves the business and the customer better in the long run.