Question

Tabitha Andes was just hired as the assistant treasurer of Southside Stores, a specialty chain store company that has nine retail stores concentrated in one metropolitan area. Among other things, the payment of all invoices is centralized in one of the departments Tabitha will manage. Her primary responsibility is to maintain the company’s high credit rating by paying all bills when due and to take advantage of all cash discounts. Pete Wilson, the former assistant treasurer who has been promoted to treasurer, is training Tabitha in her new duties. He instructs Tabitha that she is to continue the practice of preparing all checks "net of discount" and dating the checks the last day of the discount period. "But," Pete continues, "we always hold the checks at least 4 days beyond the discount period before mailing them. That way we get another 4 days of interest on our money. Most of our creditors need our business and don’t complain. And, if they scream about our missing the discount period, we blame it on the mailroom or the post office. We’ve only lost one discount out of every hundred we take that way. I think everybody does it. By the way, welcome to our team!"
a. What are the ethical considerations in this case?
b. What stakeholders are harmed or benefited?
c. Should Tabitha continue the practice started by Pete? Does she have any choice?

Answer 1

Answer and Explanation:

The act performed by the treasurer of holding the check for 4 days and blaming it to the mail room is unethical as it violates the basic principle of integrity- having honest business practice. Also such a practice of suppressing the discount period due to their large size operation results i "abuse of dominant position", which means owning to their large size, they are able to dictate the terms of the agreement as per their wish rather than following the norm.

The small creditors are getting harmed in this case, who are offering discount for early payments ,but not receiving it on time. The company is getting benefit d by unfair means as they are able to get discount on their bills and also earn 4 days interest at the same time.

The new treasurer should put an end to such practices and pay bills on time ,  if there is a delay in payment , should not take advantage of the facility.