What should a company do to improve its accounts receivable turnover rate?
A) Lower its selling prices.
B) Increase its sales force.
C) Give customers credit terms of 2/10, n/30 rather than 1/10, n/30.
D) Reduce the number of employees working in the credit department.

Question

Quizplus · Accepted Answer

Giving customers more favorable credit terms (such as extending the discount period from 1/10 to 2/10) can incentivize them to pay their bills more quickly, improving the accounts receivable turnover rate. Lowering prices or increasing the sales force may increase sales but may not necessarily result in faster payment. Reducing the credit department staff could actually hinder the collection process.

What Should a Company Do to Improve Its Accounts Receivable