Question

Please explain: 1. Detecting late payments in advance 2. Detecting late payments in advance 3. Maintaining customer relations 4.Improving the DSO How to explain this three role of creditors in an organization. Please help me to explain one by one. After explanation, please help me to do conclusion. Thank you in advance.

Answer 1

Answer)

1)Detecting late payments:It is an important funtion while selling the goods on credit basis.This is to be analysed so that another sources for payment of our bill can be found.This can be made on basis of past experiences so that they can plan short time souces for liquidity.

2)Maintaining customer relations:Customer relation is to be maintained as now a days organisations says that a customer once lost is lost forever.Hence,for one or two late payments one cannot lose a customer.

3)Improving the DSO:It can be increased through several ways like offering incentives etc because it is through which we can provide liquidity without getting required funds from other sources.

Conclusion:My conclusion is all these concepts are interlinked.First the organisation detects the late payments and then analyse what relations are to be maintained by each type of customers and finding other ways to improve day sales outstanding as to avoid liquidity problems which may lead to solvency problems.