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Granting liberal credit terms to the customers is an example of a company adopting a flexible...

Granting liberal credit terms to the customers is an example of a company adopting a flexible short-term financial policy. Granting a liberal credit term can attract more customers and stimulate the company’s sales revenues. Does that mean that a company should always grant liberal credit terms to its customers?

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Allowing liberal credit term to its clients might be advantageous in present moment for the organization however it can turn into an issue in long haul as organization may get numerous late installments. There could be cash inflow and cash outflow imbalance, which may make issue for organization. In this way conceding liberal credit term for consistently is certainly not a decent approach.

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