This is because customers are less likely to pay their outstanding balances promptly when given more
time or incentives to delay payment (Woodard, 2018). Additionally, the creditworthiness of customers
influences receivables turnover. Companies that extend credit to customers
with a lower credit rating
may experience a higher level of bad debts, leading to delays in payment and a lower turnover ratio
(Jack, 2015).
Externally, economic conditions play a vital role in receivables turnover. During periods
of economic downturn, customers
may face financial constraints, resulting in delayed or non-payments
(Striffler, 2019). Furthermore,
industry-specific factors, such as seasonal variations or technological
advancements, can also affect the speed at which receivables are collected (Brown, 2017). Understanding
these various factors is crucial for companies to effectively manage their receivables turnover and maintain
a healthy cash flow.
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