COLLECTIONS
AND
DISBURSEMENTS
allows the company to time their payments so that they hold their cash balances as long as possible.
MANAGEMENT
OF ACCOUNTS
RECEIVABLE
Reasons for Holding Cash Balances
relies on the payment pattern of customers and the efficiency of the banking system.
- transactions balances
- compensating balances for banks
- precautionary needs.
arises from time delays in mailing, processing, and clearing checks through the banking system.
Electronic Funds Transfer
system in which
funds are moved between computer terminals without the use of a “check.”
the factors influencing the choice are yield, maturity, minimum investment
required, safety, and marketability.
divided into the three categories:
raw materials, work in progress and finished goods.
Credit policy administration
Accounts Receivable as an Investment
1. Credit standards
2. Terms of trade
3. Collection policy
the test should be wheatear the level of return we are able to earn from this assets equals or exceeds the potential gain from other investments.
