A firm's collection policy and the procedures it follows to collect accounts receivable play an important role in keeping its deferrables period short, although too strict a collection policy can result in outright losses due to non-payment.

Question

Quizplus · Accepted Answer

A too strict collection policy can lead to losses due to lost sales, not non-payment. Non-payment losses occur when customers do not pay, which is more likely with a lenient policy.

A Firm's Collection Policy and the Procedures It Follows to Collect