Q. Show the Motives of Maintaining Receivables?
Motives of Maintaining Receivables :-
(i) Sales Growth Motives: - The major objectives of credit sales are to increase the total sales of the business. On being specified the facility of credit customers have shortage of cash may as well purchase the goods. Consequently the prime motive for investment in receivables is sales growth.
(ii) Increased profit Motive: - Because of credit sales the total sales of business increases. Therefore in turn results in increase in profits of the business.
(iii) Meeting Competition Motive: - In business merchandise are sold on credit to protect the current sales against emerging competition. If goods aren't sold on credit the customers may shift to the competitor who allows credit facility to them.