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Collection Costs

Collection Costs The implications of relaxed credit standards are (i) more credit, (ii) a large credit department to service accounts receivable and related matters, (iii) increase. in collection costs. The effect of tightening of credit standards will be exactly the...

Credit Standards

Credit Standards The term ‘credit standards’ represents the basic criteria for the extension of credit to customers. The quality is of establishing credit are factors such as credit ratings, credit references. an-rage payments period and certain financial...

Benefits

Benefits A part from the costs, another factor that has a bearing on accounts receivable management is the emanating from credit sales. The benefits are the> increased sales and anticipated profits bee.ruse or :I more liberal policy when firms extend trade credit,...

Delinquency Cost

Delinquency Cost This cost arises of the failure of the customers to meet their obligations when payment on credit come due after the expiry of the credit period, Such costs are called delinquency. The important components of this (i) blocking up of funds for an...