Which of the following is an effective way to improve Debtors Turnover?

Improving Debtors Turnover means increasing the speed at which a company collects cash from its credit sales. Chasing up debtors via email and phone calls is an effective strategy to enhance this aspect of cash flow management. By actively following up with customers who owe money, a business can prompt quicker payments. This proactive approach not only reminds debtors of their outstanding invoices but also fosters communication and addresses any potential issues or disputes that may be causing delays in payment. As a result, this strategy helps to maintain a healthier cash flow and improve the overall financial performance of the business.

In contrast, offering interest-free credit indefinitely could lead to longer payment periods, potentially decreasing turnover. Extending credit limits for all customers may increase sales but could also risk higher levels of uncollected debts. Reducing contact with debtors often results in less accountability, leading to delayed payments and negatively impacting the turnover rate. Thus, the strategy of actively following up with debtors stands out as the most effective method for improving Debtors Turnover.