One effect of granting credit to customers is that a firm may have to increase its borrowing if it decides to grant credit to its customers.

Name: One effect of granting credit to customers is that a firm may have to increase its borrowing if it decides to grant credit to its customers.
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Question

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Granting credit to customers can lead to a temporary cash shortfall as the business waits for payments, potentially necessitating increased borrowing to cover operational costs and maintain cash flow.

One Effect of Granting Credit to Customers Is That a Firm