Managing Payables

Question 1

What does effective management of trade payables involve?

Answer 1

Satisfactory credit terms from suppliers and maintaining good relations with suppliers

Question 2

Good relationship with suppliers?

Answer 2

Timely payment of invoices in line with agreed payment terms

Question 3

Benefit of accepting an early settlement discount from a supplier?

Answer 3

It will result in a benefit (the discount) but will result in lower payables

Question 4

How are settlement discounts for payables assessed?

Answer 4

Comparing benefit of discount to the cost of higher finance costs associated with lower payables

Question 5

What is leading

Answer 5

Companies pay invoice early to avoid risk of adverse exchange risk