My management team is concerned with our company's credit policy being too lax and wants to tighten it up. We want to enforce a stronger credit policy and lower our DSO to 25 days. We expect to lose some credit sales because of the stronger policy and believe annual sales will decline by 5%. Can someone tell me how much will our accounts recivable decrease by as a result of our new policy?© BrainMass Inc. brainmass.com October 1, 2020, 11:05 pm ad1c9bdddf
DSO = accounts receivable / (sales / 365)
38 days = $2,000,000 / (sales / 365)
38 sales / 365 = $2,000,000
The expert calculates the effect of changes to credit policy. The current DSO is examined.