Managing Receivables. Credit policy toward customers. When selling on credit, businesses need clear policies about…. Which customers? Use the 5 C’s…. Length of credit period determined by…. Note contribution = price – variable cost = 40 – 20 = 20 (or 50% of selling price).
Credit policy toward customers
* More credit implies more customers.
* The increase in finance costs assumes a 10% interest rate. There is no increase in non-payment added in this example.