Which strategy could lead to higher accounts receivable?

• A. Offering discounts for timely payments
• B. Not forcing charges
• C. Encouraging chargebacks
• D. Extending payment terms

Answer: (C)

The selection of extending payment terms is a plausible strategy that could lead to higher accounts receivable. This approach allows customers to take longer to pay off their debts, which can result in a larger amount of outstanding receivables at any given time. By enabling customers a more extended period to settle their bills, businesses might increase the likelihood of maintaining customer loyalty and enhancing sales, as clients may appreciate the additional flexibility. However, this could simultaneously result in a cumulative effect on accounts receivable as payments are deferred for a longer duration.

Contrastingly, offering discounts for timely payments encourages customers to settle their accounts quickly, potentially reducing accounts receivable levels. Not forcing charges may also lead to slower cash inflow and might not effectively manage accounts receivable. Similarly, encouraging chargebacks can destabilize account metrics and lead to decreased overall revenue.