The Good Credit Reference, Coursework Example

In this case, Kathy Ryan is the credit officer for Diversified Consolidation Corporation in charge of an account with North Manufacturing. North Manufacturing has an excellent payment history with DCC, but due to rumors of financial trouble she inquires with their treasurer, Scott Bradley. He reveals that despite the seemingly solid state of their financial statements, they are in danger of bankruptcy. He assures her that they can pay DCC with no problem as long as Basic Products extends them credit. Since DCC is a North Manufacturing credit reference, Kathy is called by Mike Walman, the Basic Product credit manager. She informs him that they have a recommendable payment record, but due to her conversation with Scott Bradley she knows this is misleading.

The ethical issue here is over how much is appropriate to tell Mike Walman. It affects Kathy Ryan herself, Mike Walman, Scott Bradley, as well as everyone with a vested interest in their respective companies. While simply telling Mike about the excellent payment record would not be lying, Kathy would be misleading him by leaving out relevant information that she knows. Her personal interest also creates a conflict of interest. If she allows Basic Product to extend credit to North Manufacturing, it is likely that their account that she supervises will be fully paid back. If she informs Walman of the situation, she puts a sizable chunk of her commission, her stature within her company, and potentially her job at stake. This may make it seem that the ethical move is to inform or at least hint about North Manufacturing’s weak financial state.

However, there is a further complication to this situation. Due to the nature of the conversation between Kathy Ryan and Scott Bradley, at a lunch meeting with a client that she shared a personal relationship with, and the consumption of several alcoholic drinks each, it can be argued that she owes it to Bradley to keep the details of her conversation secret. Surely, he told her this information in confidence, and she may owe it to him to not reveal what was said. Is the credit department at Basic Product really deserving of this extra information? If the financial records of North Manufacturing are not fraudulent and do not reveal a large enough problem to prevent Bradley from extending them credit, do they deserve this inside information?

The easiest decision to make in this situation would be the one Mike Walman needs to make. Even if Kathy does not indicate to her anything about a problem, surely he should do more research into their credit situation. He admits to hearing rumors about them being in a precarious financial state meaning he should do more research than simply contacting one reference of theirs. In fact, since North Manufacturing lists Diversified Consolidation Corporation as their credit reference, this is the last account they would miss payment on. Mike simply needs to do way more research than just the individual call to DCC. By not doing so, he creates this entire moral dilemma, by simply not doing his job well enough, assuming he did not plan on calling other creditors. While it is customary for creditors to exchange information, he is not owed any information from Kathy, and she has gave him all of the information he directly requested. That is more than she owes him.

In Kathy’s situation, she needs to look at which parties she has a responsibility towards. As an employee of DCC, she owes it to the company and their stockholders to act with their interests in mind. Although this does not include lying or fraud, honestly answering Mike’s questions about the payment record does not constitute either. She also has a responsibility to her client and friend Scott Bradley and by extension his company. Her revealing the details of their conversation to Walman would be betraying the confidence Bradley showed in her.

With this in mind, Kathy can analyze her options. For one, she can finish the conversation without giving any information about North Manufacturing’s impending bankruptcy. On the opposite side, she could reveal the details of her conversation with Bradley to Walman, which would lead to him not granting the credit. In the middle of the two prior options, she could hint to Walman that she should inquire with their other creditors. This would not directly betray the confidential information Bradley revealed to her.

Ultimately, I think Kathy Ryan’s options come down to not revealing anything to Walman or telling him to do more research. The other option significantly betrays confidence she owes to Bradley. By not revealing anything, she will likely significantly hurt Basic Products while benefitting her company and North Manufacturing. Revealing information or hinting at it would benefit Basic Products while hurting her, her company, and Scott Bradley’s. Due to where she owes interest to, I feel that she should not reveal anything and see if Mike does more research on his own. I do not feel that it is unethical to act in her own self interest, as she would be acting in the interests of those she owes something to. The fact that it benefits her is certainly a benefit, but that does not make her actions unethical.

Simply, I do not feel that she owes Mike any more information than she has given, but she certainly owes the stockholders of her company that she will act in their interest. Also, revealing the information given from a friend who trusted her would be both unethical and possibly illegal.