The accounts receivable are a cost for businesseses. This principle is obvious to any business manager.
It is necessary to evaluate this cost in order to:
- Assess the Return on Investment of a AR financing project
- Define its business strategy on payment terms taking into account this cost when assessing the profitability of a quotation.
- Set up discount offers for early payments.
- Establishing the interest rate of late payment penalties.
- Educate its sales people to obtain advance payments and best payment terms.