If the average collection period has increased and credit terms remain the same, the company should put a greater emphasis on collections.

Question

Quizplus · Accepted Answer

An increased average collection period indicates that it is taking longer for the company to collect payments from its customers, suggesting potential issues with its collection processes or customer payment behaviors. Maintaining the same credit terms while addressing these collection inefficiencies can help improve cash flow and financial stability.

If the Average Collection Period Has Increased and Credit Terms