13.27 Managing accounts receivable **LO3 Coconut Plantations Pty Ltd manufactures sustainable, coconut-based products for sale to wholesalers and retailers around Australia and New Zealand. Jo Geter, the manager, has a goal of increasing the market share of the company. Strategies to achieve this goal are increasing marketing and promotional activities, and offering attractive credit terms to new customers. The implementation of both strategies has been successful. Coconut Plantations is enjoying an upsurge in sales and its accounts receivable balances have increased dramatically to average $140 000 on most trading days of the year. If Jo could reduce the accounts receivable balance, she believes the company could increase its inventory, sales and profitability. But Jo is concerned about exerting too much pressure on its accounts receivable for fear of losing customers. Required (a) How could Coconut Plantations encourage its credit customers to pay earlier? (b) If Coconut Plantations' accounts receivable management strategies result in average accounts receivable reducing to $90 000, how would this lead to increases in sales and profitability? 13.30 Managing accounts receivable LO1, 3 * Baxter Ltd reported $200 million in credit sales in 2017-18 and 2018-19. Average accounts receivable dropped from $25 million to $20 million over the two periods. Required (a) Assuming 220 trading days each year, how has debtors turnover changed? (b) Explain why this might have occurred.