Deustche Breueries - When DB first entered the Ukranian...

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When DB first entered the Ukranian market, Oleg relaxed the credit policy for Ukranian distributors from 2 percent 10, net 40 to 2 percent 10, net 80 (clients could take a 2% discount if payment was made within 10 days of the invoice, otherwise payment was due in full within 80 days). The credit policy for Ukranian distributors differed because Ukrainian entrepreneurs, while eager and entrepreneurial, were not privy to the same capital or bank loans that German distributors had access to. The credit policy for the Ukranian distributors was appropriate, given that they were expanding, getting new equipment, and required more time than usual to pay. A flexible credit policy in the Ukraine is appropriate initially while building relationships and as the beer distribution pipeline is developed. However, Oleg would like to extend the credit policy from 80 to 90 days. The current receivables show e6,168 in 2000 and is projected to increase about 50% in 2001 and then another 30% in 2002. Having money tied up in accounts receivables is certainly not as profitable as having cash in hand. Oleg’s proposal to relax the credit policy even further is a high risk and may result in distributors settling accounts even later.
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