Andro Co makes all its sales on credit and allows its customers 30 days’ credit.
However, analysis of the financial statements shows that the average accounts receivable period in the last financial year was 70 days. This has increased from 50 days in the previous financial year. In addition, bad debts as a percentage of sales increased from 3 to 6 per cent. The CEO has expressed great concern at these figures and has asked for your assistance in improving the management of accounts receivable.
Required:
Write a report to the CEO of Andro Co which details ways in which the company could improve the management of its accounts receivable.