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Chapter 9

Working capital management –

Accounts receivable and payable

Outcome

By the end of this session you should be able to:

 explain how to establish and implement a credit policy for accounts receivable

 explain the administration involved in collecting amounts owing from accounts
receivable

 explain the pros and cons of offering early settlement discounts to accounts
receivable and calculate the financial implications of early settlement

 define and explain the features of factoring and invoice discounting and discuss
the pros and cons

 suggest and evaluate suitable techniques for managing accounts receivable
within a scenario question

 explain the factors involved in the effective management of trade credit

 calculate the effective cost of an early settlement discount offered on an
account payable

 discuss the pros and cons of trade credit as a source of short-term finance

 explain the specific factors to be considered when managing foreign accounts
receivable and payable

and answer questions relating to these areas.

The underpinning detail for this Chapter in your Integrated Workbook can
be found in Chapter 9 of your Study Text

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