Accounting · Working Capital Management
In an attempt to improve its liquidity position, Tel Co is considering offering an early settlement discount to its customers. Complete the sentence: Offering prompt payment discounts to customers should [increase/decrease] the time taken to recover debts. However, it will also [increase/reduce] the total cash received.
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1Offering prompt payment discounts to customers should reduce the time taken to recover debts. However, it will also increase the total cash received.
- 2Offering prompt payment discounts to customers should increase the time taken to recover debts. However, it will also increase the total cash received.
- 3Offering prompt payment discounts to customers should increase the time taken to recover debts. However, it will also reduce the total cash received.
- 4Offering prompt payment discounts to customers should decrease the time taken to recover debts. However, it will also reduce the total cash received.✓
Correct answer
Offering prompt payment discounts to customers should decrease the time taken to recover debts. However, it will also reduce the total cash received.
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