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Unformatted text preview: Company can sell the goods on credit or cash . Cash sale is inflow of cash and it is controlled under cash flow analysis . But credit sale creates sundry debtors . Company has to receive money from them. If company starts to sell on return of cash, then it decreases the level of companys sale and profitability. On the other side, if company promotes credit sale, it can increase the risk of bad debts . So, it is required to control and to manage debtors. Meaning of Debtor management Debtor management means the process of decisions relating to the investment in business debtors. In credit selling, it is certain that we have to pay the cost of getting money from debtors and to take some risk of loss due to bad debts . To minimize the loss due to not receiving money from debtors is the main aim of debtor management. Main elements or dimensions of Debtors management For effective debtor management, following elements should be analyzed 1. Credit policy1....
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This note was uploaded on 10/19/2011 for the course FINANCE 302 taught by Professor Staff during the Fall '10 term at East West University, Chicago.
- Fall '10