Question

INFO: Company A does not accept credit cards and does not charge interest on receivables and uses the direct write-off method to record any bad debt expense; Currently, Company A Days Sales In A/R is 62 days. The industry average last year was 33 days for organizations in similar industries with comparable sales

Age of Receivables	Amount Outstanding	%age uncollectable
Current Accounts	$3,000,000.00	1.00%
0–30 days past due	400,000.00	3.00%
31–60 days past due	350,000.00	6.00%
61–90 days past due	85,000.00	12.00%
Over 90 days past due	380,000.00	30.00%

1) What is the difference between Accounts Receivable, Notes Receivable and accepting Credit Cards

2) What are the pros and cons of each method

3) How could a mix of allowing different payment methods by customers can benefit the organization

Answer 1

	Accounts Receivables	Notes Receivable	Accepting credit cards
1)	Difference
Meaning	Unpaid credit sales is called as accounts	It is a promisory notes as given	Accepting credit cards against
	receivables	by customer against the outst-	credit sales is a way where
		anding amount	customer pay through credit
			card. Fund received in merchant
			banker account first and then transfer
			to seller account after deduction of
			certain bank commission.
Interest elements to	No interest is charged	Interest charged after agreed	Customer pay immediately through
customers		time limit such as 30 days	credit card without interest
2)	Pros
	Accounts receivable facility allow	Notes receivable gives further	Credit card facility give customer option
	credit sales to customer, which increase	financial assistance to customer by	to purchase through card and payment
	sales also.	granting additional some days to	to bank for card after certain time i.e
		pay outstanding amount. It is also	month month.
		reduce bad debts possibility. Benefit of
		interest income on notes receivables to
		seller
	Cons
	Increase the possibility of bad debt loss	Increase the possibility of bad debt loss	Less sales collection due to bank charges
		Enhance burden to customers	on credit card
3) Providing all facility (mix of all) like cash, credit, notes receivable and credit card give the following benefits:
> Increase Sales
> Optimisation of bad debts
> Financial assistance to customers
> Additional income as interest income
Note: Let me know if any query. It is advisable to use given information in question addition to my answer. Thanks