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    Using Accounts Receivable to Improve Cash Flow

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    How can a credit manager use accounts receivable to improve cash flow? What are the risks involved?

    What are the reasons behind adopting a zero-based budget? Do you agree with those reasons?

    Is it better to amend a budget or allow for budget variances? Why or why not?

    Thanks!

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    https://brainmass.com/business/cash-budgeting/using-accounts-receivable-improve-cash-flow-17555

    Solution Preview

    Hello,

    1) If cash flow is a major issue, accounts receivables can be a gold mine of cash. Sometimes in certain markets, the competitive situation requires that sellers offer credit terms to their customers. Asking customers to pay cash up front can severely hurt business. So, other options include offering credit terms, but with an incentive to pay early by discounting the amount owed. For example, offering 30 days credit, but if the customer pays say within 10 days, he can take a 1% discount. This will encourage better cash flow at a relatively small cost. The ...

    Solution Summary

    The expert uses the accounts receivable to improve cash flow.

    $2.19

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