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A member of your management team reports to you that she is working to get your...

A member of your management team reports to you that she is working to get your customers to pay on shorter terms (30 days after they received the merchandise versus 60 days). Is this a good thing or do you tell her to stick with 60 days?

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A member of your management team reports to you that she is working to get your customers to pay on shorter terms (30 days after they received the merchandise versus 60 days). This is a good thing for the organisation and the member of the management team should be encouraged to do this.

This will be beneficial to the company as the interest cost in the money left with customers will be saved. Also, the longer the receivables will take to pay, the more is the requirement of working capital. Thus it should always be encouraged to reduce the credit period provided the sales are not affected.

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