Archive about 'Accounts Receivable Management'
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 […]
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 […]
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 […]
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 […]
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. […]
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 […]