Management of Accounts Receivable under Inflation

descriptionPublicationkeyboard_double_arrow_right Article 01 Jan 1983Publisher:WileyJournal:Financial Management, volume 12, page 42 (issn: 0046-3892,

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Authors: Moshe Ben-Horim; Haim Levy;

doi: 10.2307/3664837

Management of Accounts Receivable under Inflation

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Abstract

* One aspect of working capital management is the determination of terms of credit specifying the period for which credit is extended and the discount, if any, given for early payment. If the terms are "2/10 net 30," for example, then a 2 percent discount of the sale price is granted if payment is made within 10 days and the full sale price is due within 30 days from the invoice date if the discount is not taken. The discount provides an incentive for early payment, and the benefit from taking the discount may be easily calculated. The calculation of the annual percentage benefit (APB) is as follows:'

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