Fingerhut started as a small entrepreneur business in 1948 and has now grown into a nation-wide direct retailer. The company headquarters is located in St. Cloud Minnesota. The company sells a variety of different items from apparel, health and beauty, jewelry, sporting goods, and toys. The products that Fingerhut sells can be purchased through catalogs, internet, or by phone orders to the company
The issue that the company had was dealing with the problem that customers who were cash paying customers were not making a payment every month as agreed upon. The other area was with customers who had credit terms and were not paying their accounts on the date that they were due. The credit guidelines in the past were very easy credit terms and allowed almost everyone that wanted to buy something the opportunity to do so and make a monthly payment. To help solve the problem of getting the accounts receivable under control for customers who were making payments to the company.
Fingerhut made some changes that would help in the accounts receivable area. First time buyers were only allowed to buy one item at a time and could not purchase anything else till that item was paid off. Once the customer had a good payment history then they would be able to purchase more than one item. For the credit customers the company currently had an inconsistent policy on there credit terms. The company decided to enact a strict policy on credit terms. There would be stiff penalties in the account went past due. They also would limit the amount of credit given to an individual they would first give a lower credit limit and then move up as the customer proves to the company his credit worthiness(Fingerhut, 2008).