CIMA BA3 · Chapter 13 · Question 8 of 10
A company's receivables collection period has risen from 38 days to 57 days. Which of the following is the most likely explanation?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) Credit control has become less effective, or customers have been given longer credit terms
Explanation
A longer collection period means customers are taking longer to pay, which may reflect weaker credit control or a decision to offer longer terms to win sales. A switch to cash sales or large write-offs would usually reduce receivables and shorten the period.
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