Liberalized credit terms involve the following costs EXCEPT
A)risk of default
B)increased liquidity for the firm
C)increased interest expense on the larger investment in receivables
D)the deterioration of the value of accounts receivable denominated in buyer's currency

Question

Quizplus · Accepted Answer

Liberalized credit terms may lead to increased liquidity for the firm as they receive payments from customers earlier, but they also involve increased risk of default, increased interest expense on the larger investment in receivables, and the deterioration of the value of accounts receivable denominated in buyer's currency. However, there is no cost associated with increased liquidity for the firm.

Liberalized Credit Terms Involve the Following Costs EXCEPT