A firm that extends credit for only 30 days is likely to receive its payments faster than a firm that allows customers 60 or 90 days, but such a policy is likely to cause a loss of sales.

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By extending credit for only 30 days, the firm is likely to receive payments faster. However, customers who need longer credit periods may be deterred from purchasing from the firm, causing a loss of sales.

A Firm That Extends Credit for Only 30 Days Is