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    Cash Management Techniques: Cash Rebates

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    Among the cash management techniques used by most businesses are those that slow down their bill payments. A good example for this is "Cash Rebates" offered on household items like computers and other electronics.

    1. Are these practices sound business decisions? Are they ethical? Explain.
    2. What percentage of the rebates offered are actually paid?

    Select a business you are familiar with and explain whether you would recommend this business use cash rebates.

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    Solution Preview

    Offering a rebate is a good business decision for any company - to some extent. According to Brian Glow in his BusinessWeek article, The Great Rebate Runaround (11/23/2005), "the country's retailers and manufacturers love them." Does this make them ethical. Not in the least. Many companies place strict requirements on the rebate. Glow continues on pointing out that TiVo shocked Wall Street with its First Quarter turnaround in 1995. TiVo projected a $9.1M loss and actually reported one of only $857,000. TiVo capitalized on consumers being lazy or too busy to send in rebates that generated $5M in profits. Glow reported, "TiVo says it generally sees lower redemption rates ...

    Solution Summary

    Discusses the perception of rebates and the percentage of those redeemed. Cites one web reference and one product reference for program management.