Asked by Kayla Cohen on Jul 14, 2024
Verified
Increasing the finance charges applied to all customer balances outstanding over thirty days will tend to decrease the accounts receivable period.
Finance Charges
The cost of borrowing money, including interest and other fees, that a lender charges a borrower for the use of funds.
Accounts Receivable Period
The average number of days it takes a company to collect payment after a sale has been made.
- Ascertain the influence of credit policies on liquidity and the cash conversion cycle.
Verified Answer
FP
Fatima PerezJul 19, 2024
Final Answer :
True
Explanation :
Increasing finance charges on late payments incentivizes customers to pay sooner, thus reducing the average time that receivables remain outstanding.
Learning Objectives
- Ascertain the influence of credit policies on liquidity and the cash conversion cycle.
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