Which one of the following best defines the term 'collection policy'?
A)process of determining which customers will be granted credit
B)daily process of handling cash inflows and outflows of cash
C)set of guidelines used by a firm to determine the cost of offering credit to its customers
D)process of determining the probability customers will not pay
E)set of procedures a firm follows in collecting accounts receivable

Question

Quizplus · Accepted Answer

Collection policy refers to the set of procedures a firm follows in collecting accounts receivable. It outlines the firm's approach to credit management, including credit terms, the process for invoicing and collecting payments, and the actions taken in case of delinquent accounts.

Which One of the Following Best Defines the Term 'Collection