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el., 2005, ch.28, p.10) A firm can either grant or refuse credit depending on which results with the best NPV. “A collection policy is a method of dealing with past-due accounts.” (Ross, et. el., 2005, ch.28, p.17) A company must ensure they have enough cash flow from receivables to pay their bills. “A firm will extend trade credit if it has a comparative advantage in doing so.” (Ross, et. el., 2005, ch.28, p.12) A company determines the level of each of these areas depending on the distinct situation.
There are different approaches when choosing the best strategy to use for a company...
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