It is essential for organizations to consistently monitor their average collection period and adapt their credit policies accordingly. By doing so, businesses can respond to industry trends, customer preferences, and economic conditions that may impact their receivables management practices. Regularly reviewing the average collection period enables companies to make informed decisions, optimize their collections processes, …
The average collection period is the timea company’s receivables can be converted to cash. It refers to how quickly the customers who bought goods on credit can pay back the supplier. The earlier the supplier gets the funds, the better it is for business because this fund is a huge source of liquidity. The Average …
Average Collection Period: Formula, Interpretation & Tips Devamı »
Take, for instance, the decision to repair or replace machinery in a manufacturing facility. The direct cost of repairing the machine might seem relevant when compared to the cost of replacing it. However, deeper analysis might reveal that the repaired machine’s performance, efficiency, and maintenance costs in the long run will make it less cost-effective …
How To Separate Relevant And Irrelevant Costs For Decision Making Devamı »
A cost that is relevant for one decision may be irrelevant for another. For example, if a company is deciding whether to accept a special order from a customer, the relevant costs are the incremental costs of producing and delivering the order. However, if the company is deciding whether to discontinue a product line, the …
