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    Should companies pay bills when they are due or earlier?

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    Do you think that companies should maximize their payment power by only paying bills when they are due rather than early so they can use the cash flow on something else?

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    Absolutely, a company should pay bills when they are due and not much earlier, unless a discount is involved. Good cash management policies would dictate this procedure.

    Here's an example: let's say you are the CFO for a small manufacturing company. In a normal month, your company pays vendor invoices of about $100,000. Your accounting system ...

    Solution Summary

    In a 239-word solution, the response explains how good cash management policies should work. There are practical examples included for better understanding of why cash management policies are important.