If receivables are increased and the time taken to pay trade receivables is reduced,then funds are freed up to use for other purposes

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If receivables are increased and the time taken to pay trade receivables is reduced, it means that the company is collecting money from its customers faster, but at the same time, it is also giving them longer credit periods. This may result in a cash flow problem because the company will have to pay its suppliers before it receives payment from its customers, leading to a shortage of funds to use for other purposes. Therefore, funds are not freed up, but rather tied up.

If Receivables Are Increased and the Time Taken to Pay