07-09-2013, 04:29 PM
Management of Receivables
Management of Receivables[.ppt (Size: 55.5 KB / Downloads: 14)
Meaning of receivables
The debt owed to the firm by customers arising from the sale of goods and services in the ordinary course of business.
Benefits and costs
Receivables are a marketing tool to promote sales and thereby profit
Creation of receivables involves risk and cost
Objectives
To promote sales and profit until that point is reached where the return on investment in further funding receivables is less than the cost of funds raised to finance that additional credit.
Optimum receivables
The decision to commit funds to receivables will be based on a comparison of the benefits and costs
The costs and benefits to be compared are marginal costs and benefits