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Lg4 review the procedures for quantitatively

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Unformatted text preview: stent with the firm’s credit standards. Two popular credit selection techniques are the five C’s of credit and credit scoring. Changes in credit standards can be evaluated mathematically by assessing the effects of a proposed change in profits on sales, the cost of accounts receivable investment, and bad-debt costs. LG4 Review the procedures for quantitatively considering cash discount changes, other aspects of credit terms, and credit monitoring. Changes in credit terms (particularly the initiation of, or a change in, the cash discount) can be quantified in a way similar to that for changes in credit standards. Changes in the cash discount period can also be evaluated using similar methods. Credit monitoring, the ongoing review of customer payment of accounts receivable, frequently involves use of the average collection period and the aging of accounts receivable. A number of popular collection techniques are used by firms. LG5 Understand the management of receipts and disbursements, including float, speeding collections, slowing payments, cash concentration,...
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