Ali Khan has a business selling computer games. All games are sold on credit to high street retailers. His predicted sales for the next three months are:

Each game is sold for $20 each. Ali expects 60 per cent of each month's sales to be paid for one month after sale. The rest will pay two months after the sale. At the start of month 1, Ali is owed $58 000: $42 000 from the previous month and $16 000 from two months earlier. He has heard a Rumour that Jermaine, one of his major customers, is having financial problems and may stop trading during month 1. Jermaine owes $15 400 from two months ago. Ali is concerned that he does not have good credit control management and believes that there are measures he could take to stop this level of debt arising with one customer. 

a. Prepare a trade receivables budget for the period month 1 to month 3. 

b. Explain one approach Ali could take to improve his credit control management and explain the effect it would have on the trade receivables budget for months 1-3.

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Month 1 2 030 games Month 2 2 240 games Month 3 2 160 games