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As you are aware, one risk to the strategic plans of Big Red Bicycle (BRB) is bad debt and poor cash flow due to large trade debtor balances. Consider the following:
• According to its policies, BRB offers 30 day terms to debtors.
• BRB does not currently train sales staff on credit terms.
. There is currently no enforcement of credit terms.
& Warehousing of stock is expensive at current leased premises.
Many bicycles need to be thrown out if parts rust; this problem exacerbates the problem of waste expense. You have the following information from the Statement of Financial Position and current ledger accounts in the electronic accounting system (MYOB AccountRight).
Account $
Trade debtors 362,500
Trade creditors 80,000
Opening stock 100,000
Closing stock 300,000
Purchases 1,000,000
response document, make two written recommendations for improvement to existing financial management processes to improve cash flow. To support your recommendations, refer to data sources, organisational needs, and analytical techniques, for example:
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