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Capital Management

What collection and payment policies can be used to better balance the cash flow need of companies?

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Effective cash flow management means controlling cash inflow and outflow factors so that the business always has sufficient cash resources to meet its financial obligations and to generate profits. As internal working capital is the best and most accessible source of cash, improving cash flow processes around receivables, payables and inventory, can result in both better control of working capital and also a better cash position.

Many companies are focusing on receivables - one of their largest untapped cash resources. Faster billing, proactive collections follow-up, proper dispute resolution, reduction of claims/chargebacks and bad debt, as well as improving A/R (Accounts Receivables) staff efficiency, are top collection policies to use to better balance the cash flow needs.

Likewise, gaining better control of payables, reducing the cost of A/P (Accounts Payables) operations and increasing days payable outstanding, without straining supplier relationships, is a priority in companies aiming to optimize working ...

Solution Summary

Collection and payment policies which can be used to better balance the cash flow need of companies are explained.