Business Studies – 5.4.1 The main elements of a statement of financial position | e-Consult
5.4.1 The main elements of a statement of financial position (1 questions)
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Answer:
A business can improve the management of trade receivables through several methods:
- Credit Checks: Implementing thorough credit checks on new customers to assess their creditworthiness before extending credit. This reduces the risk of bad debts.
- Clear Credit Terms: Establishing clear and concise credit terms (e.g., payment deadlines, discounts for early payment) and communicating them effectively to customers.
- Invoice Promptly: Sending invoices promptly after goods or services are delivered to ensure timely payment.
- Follow-up on Overdue Invoices: Implementing a system for regularly following up on overdue invoices, including sending reminders and potentially charging late fees.
- Offering Incentives: Providing discounts for early payment can encourage customers to pay quickly.