Accounting for IGCSE & O level - Advanced Principles (Section 7 - No. 7)
How does a shorter trade receivables collection period generally affect a business's cash flow?
It improves cash flow.
It decreases cash flow.
It has no impact on cash flow.
It only affects the cash flow of suppliers.
Forklaring
A shorter collection period results in faster cash inflows, thereby improving a business's cash flow.