You have been hired as the accounting manager of Taylor, Inc., a provider of custom furniture. The company recently switched its method of paying its salespeople from a straight salary to a commission basis in order to encourage them to increase sales. The salespeople receive ten percent of the sales price at the time of the sale. You have noticed that the company's accounts receivable balance is growing because the salespeople are granting more credit to their customers.

Required 

Draft a memorandum explaining why it is important to closely monitor the company's accounts receivable balance and why a large balance could lead to cash flow problems.