Invoice or Bill Discounting or Purchasing Bills
The terms ‘invoice discounting’ or ‘bills discounting’ or ‘purchase of bills’ are all same. Invoice discounting is a source of working capital finance for the seller of goods on …
Techniques of Managing Accounts Payable / Trade Credit
Managing accounts payable or trade credit is crucial for a business from various angles. First, it satisfies the working capital financing needs of the business. Secondly, efficient management of …
Types of Inventory / Stock
5 Basic types of inventories are raw materials, work-in-progress, finished goods, packing material, and MRO supplies. Inventories are also classified as merchandise and manufacturing inventory. Other such classifications on …
Disadvantages of Trade Credit
DEFINITION OF TRADE CREDIT Trade credit is an important Sources of Working Capital extended or generated by the business itself. It can be defined as ‘delay of payment’ permitted by …
Cost of Trade Credit
Does Trade Credit also Costs? The statement “trade credit has no explicit cost” is a misleading statement. It is only partially correct. The trade credit is free only till …
What is Relevant Range?
Relevant range is a level of volume or activity within which a company is expected to operate. All the budgeting and costing exercise are conducted with relevant range as …
Advantages of Trade Credit
There are various advantages of trade credit making it a favorite source working capital for all levels for buyers and promotional tool for suppliers. Most important benefit is that …
Relevant Costs
Relevant costs are defined as the costs that arise in future and are different for different alternatives. The concept of relevant costs are used by management for making various …
Differential / Incremental Cost
Differential Cost or Incremental Cost is the difference in total relevant cost between two alternatives. Commonly, these alternatives are ‘make or buy’, ‘two different level of activity’, etc.
Sources of Working Capital
Sources of working capital can be spontaneous, short term and long term. Spontaneous working capital includes mainly trade credit such as the sundry creditor, bills payable, and notes payable. …
