Archive about 'Accounts Receivable Management'

Factors Affecting The Amount Of Accounts Receivables

Tweet Some of factors include the following:   Type/Nature of Business: Food business on cash basis whilst manufacturing business has more accounts receivable  Level Of Sales: Aggressive top management will resort to relaxation or extension of credit terms to the customers to boost up the firms’ sales volume  Credit And Collection Policy: Companies which has […]

Accounts Receivable Management-Extension/Relaxation Of Credit Period To Increase Firm’s Sales

Tweet Managing Accounts Receivable is also known as Credit Management or Credit Control. In an organization, credit sales form large portion of the sales re: about 15% to 25% of a firm’s assets. To increase sales, top management will resort to increasing/extending the credit period to the customers. Append below showed how we compute the […]

Working Capital Management:Extending Credit Terms To Increase Sales

Tweet It is very normal for students of financial management being asked question on the effect of extending credit terms to increase sales. Append below is a simple illustration for a better understanding of investment in receivables or extension of credit terms: Illustration: Company ABC Ltd has a current sales of $2.6 million. It wants […]

Accountancy Mathematics: Cash Discount (Part 3 of 3)

Tweet This is the final part of Cash Discount which dealt with: Taking Advantage Of Cash Discount on Partial Payment of Invoices PARTIAL PAYMENT OF INVOICE & IMPACT ON CASH DISCOUNT Very simply, if a buyer pays part of the invoice within the discount period, he can only be entitled for proportionate fraction of the […]

Accountancy Mathematics: Cash Discount (Part 2 of 3)

Tweet This is the second part of a series of 3 articles on Cash Discount which dealt with the use of borrowings to pay to take advantage of Cash discount BORROWING TO TAKE ADVANTAGE OF CASH DISCOUNT. ILLUSTRATION 1 Mr A bought some goods valued at $100,000 with a cash discount terms of 5/10, n/60. […]

Accountancy Mathematics: Cash Discount (Part 1 of 3)

Tweet As discussed in my earlier basic financial accounting article: Cash discount is an allowance/reduction on the amount due by the customers when they pay their bills within a stipulated period of time; This is to encourage prompt payment of bills; The credit terms which comprise the cash discount rate and the credit period are […]