How would you expedite collections and slow disbursements?
Industry norms set a benchmark or the custom regarding the supplier and the customer credit. But there are various other factors also like competitive position of the company, Attitude of the management etc. It also depends on the relationship with the customers and vendors. In order to improve cash flow position organization could improve long-term relations with the vendors. The focus should be to reducing the quantum of payment by getting the better discounts from them. Thus, it will help in reducing the purchase price and cost per unit. It will also reduce the cash outflow per unit.
It should also try to increase the payable period to improve the net working capital and cash flow position. But it should not stretch it too far as it will lead to loss of reputation for the company and the vendor may ...
This solution discusses collections and disbursements.