Sibongile runs a successful furniture company, Elite Designs, that supplies custom-made furniture to both businesses and individual customers. Although her products are popular, she has noticed that some clients are taking too long to pay their invoices. These overdue payments are starting to impact the company's cash flow, making it difficult to pay suppliers on time and cover operational costs. Which financial activity should Sibongile focus on to address the issue in the scenario?

Question

A.
Financial reporting

B.
Collecting external information on financial matters

C.
Salary administration

D.
Debt collection

Answer 1

In the scenario described, the most appropriate financial activity for Sibongile to focus on to address the issue of overdue payments and its impact on cash flow is:

D. Debt collection

By improving her debt collection practices, Sibongile can ensure that overdue payments are collected in a timely manner, which will help stabilize the company's cash flow and enable her to meet her financial obligations, such as paying suppliers and covering operational costs.