Analyse the efficiency of Kuman Buys cash collection policy and make recommendations on how to improve the cash policy.

ADDITIONAL INFORMATION Current and budgeted information: A discount of 5% will be allowed to cash customers. It is expected that debtors will settle their accounts as follows: 50% in the month following the sale. 30% in the second month following the sale. 15% in the third month following the sale. 5% bad debts. 1. Purchases are based on 40% of total sales for each month. Suppliers are expected to allow 30 days credit. 2. Salaries are normally paid in the month in which they occur. This was not the case at the end of March when a technical problem occurred, and it was only paid on the second day of April. 3. Kumanbuy Traders had negotiated a loan with the bank of R40 000 to be received on 4 May 204. Interest at a rate of 8% per annum is payable at the end of each quarter. 4. The amount owing to SARS is R7 000. The final date for the payment of income tax is 31 May 204. 5. According to the rent contract that was signed on the 1st January 20.4 , rent expense for the year is R72000. This must be paid quarterly in advance. 6. A salary bonus of the average salaries of the first five months of the year will be paid in May. 7. Sundry expenses are paid in the month in which they occur and include depreciation of R2 500 per month. 8. The cash balance on 31 March 204 is R13 900