Approving Credit
The next step in the revenue cycle is transaction authorization, which involves verifying
the customer’s creditworthiness. The circumstances of the sale will determine the nature
of the credit check. For example, a seller may perform a full financial investigation on
new customers to establish a line of credit. However, once a credit limit is set, credit checking
on subsequent sales may involve nothing more than ensuring that the current sale does
not exceed the limit. In our hypothetical system, the credit authorization copy of the sales
order is sent to the credit department for approval. The returned approval triggers the
release of the other sales order copies simultaneously to various departments. The credit
copy is filed in the customer open order file until the transaction is completed.