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Short term Assets: Payment Terms and Collection Efforts

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When it comes to steady cash flow and days working capital, short term assets are the most important. I'd suggest strict payment terms and diligent collections efforts, to be the most effective in covering the organizations costs. I do believe that discounts for timely payments is feasible. You'd receive the money faster, bank it to gain interest or even save on outgoing costs from the company's coffers. Not to mention the savings on the collections efforts/ resources. I'd also suggest reductions of controllable costs where possible (consulting fees, vendor payments, supply costs, etc).

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Solution Summary

This solution discusses the importance of short term assets, with strict payment terms and diligent collection efforts. It outlines why this is important and gives examples.

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I agree with your position, however, discounts for timely payments can be a double edged sword. On one side it encourages faster payment, on the other side vendors take advantage of the discount by paying late and still taking ...

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Sally Baldwin, Ed.D
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