Base Company buys in sand, gravel, cement powder and steel reinforcement. These raw materials cost about $15 million most years. Base Company has recently enjoyed a surge in sales after it liberalised its credit policies. The result of the change in credit policies is that the value of accounts receivable has risen and management have decided to hold higher levels of raw material inventories. As a result, Base Company is experiencing something of a cash squeeze. The financial manager thinks a $250000 commercial bill will give the entity time to sort out the increased accounts receivable problems. This finance will cost 8 per cent per annum. The sales manager comes up with another idea, of slowing down creditor payments to an average 45 days to match the increase in accounts receivable. Alternatively, Base Company has been in contact with a factoring company that has offered to take over a proportion of the accounts receivable at a rate of 80 per cent of the original accounts receivable balance (i.e. a 20 per cent discount). What plan of action do you suggest for Base Company? What are the advantages and disadvantages of each of the three strategies that have been put forward?