Introduce a credit period

Credit period is the time when the enterprise allows customers to buy goods and pay, or the payment period given by the enterprise to customers. For example, if an enterprise adopts the credit policy that customers pay within 50 days after purchase, the credit period is 50 days. The credit period is too short to attract customers, which will reduce sales in the competition; A longer credit period is beneficial to the increase of sales, but blindly relaxing the credit period only considering the increase of sales will sometimes offset the income brought by the increase of expenses and even reduce profits. Therefore, enterprises must carefully study and determine the appropriate credit period. The determination of credit period is mainly to analyze the influence of changing the current credit period on income and cost. Extending the credit period will increase sales and have a favorable impact; At the same time, the increase of accounts receivable, reminders and bad debt losses will have an adverse impact. When the former is greater than the latter, the credit period can be extended, otherwise it should not be extended. If the credit period is shortened, the opposite is true.