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Each of the following causes a cash flow problem EXCEPT which one?

A) slow-paying customers
B) a large proportion of credit sales
C) customers who pay early
D) unexpected slow selling seasons

1 Answer

2 votes

Final answer:

Customers who pay early do not cause cash flow problems, unlike slow-paying customers, a large proportion of credit sales, and unexpected slow selling seasons.

Step-by-step explanation:

The correct answer is C) customers who pay early.

While slow-paying customers (option A), a large proportion of credit sales (option B), and unexpected slow selling seasons (option D) can all cause cash flow problems, customers who pay early actually have a positive impact on cash flow. When customers pay early, it means that the business receives the revenue sooner, which can help improve cash flow and reduce the risk of cash flow problems.

For example, if a business has slow-paying customers, it may have to wait longer to receive payment for goods or services provided. This delay can create a gap between the expenses incurred in producing the goods or providing the services and the revenue received, leading to a cash flow problem. However, when customers pay early, the business receives the revenue sooner, which helps to bridge that gap and maintain a healthier cash flow.

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