Explain the techniques that can be used to accelerate the firm’s collections?
Answers
Answer:
The following points highlight the top four methods of accelerating cash inflows, i.e , 1. Prompt Payment by Customers 2. Quick Conversion of Payment into Cash 3. Decentralised Collections 4.
Explanation:
hope this will help you...xD
The four techniques that can be used to accelerate the firm’s collections are:
1. Prompt Payment by Customers
2. Quick Conversion of Payment into Cash
3. Decentralized Collections
4.Lock Box System.
1. Prompt Payment by Customers
Customer payments must be promptly collected in order to hasten cash inflows. With fast billing, this will be doable. The amount due and the deadline for payment should be promptly disclosed to the clients.
2. Quick Conversion of Payment into Cash
By making the cash collection procedure better, cash inflows can be hastened. Once a consumer writes a check in the company's favour, the collection process might move forward more quickly if the check is cashed right away. The customer's check is sent, and money isn't immediately collected against it.
3. Decentralized Collections
A large company that operates throughout a large geographic area can speed up collections by adopting a decentralized collection system. Instead of collecting receipts in one location, a variety of collecting centers have opened in various locations. The purpose of opening several collection centers is to shorten the time it takes for a client to send a check and for that check to be received by the business.
4.Lock Box System.
Another method of cutting down on mailing, processing, and collection time is the lock box system. Under this strategy, the company chooses a few collection points in various locations. The locations are chosen based on the number of consumers and the amount of remittances expected from each location. The parties are asked to mail the checks to the post box number that the company rents out in a post office.
#SPJ3