Case 6-2 Collecting accounts receivable The following is an excerpt from a conversation between the office manager, Terry Holland, and the president of Northern Construction Supplies Co., Janet Austel. Northern Construc- tion Supplies sells building supplies to local contractors. Terry Janet, we're going to have to do something about these overdue accounts receivable. One-third of our accounts are over 60 days past due, and I've had accounts that have stayed open for almost a yeart Janet, I didn't realize it was that bad. Any ideas Terry: Well, we could stop giving credit. Make everyone pay with cash or a credit card. We accept MasterCard and Visa already, but only the walk-in customers use them. Almost all of the contractors put purchases on their bills. Janet: Yes, but we've been allowing credit for years. As far as I know, all of our competitors allow contractors credit. If we stopped giving credit, we'd lose many of our contractors. Theyd just go elsewhere. You know, some of these guys run up bills as high as $50,000 or $75,000 There's no way they could put that kind of money on a credit card Terry! That's a good point. But we've got to do something Janet: How many of the contractor accounts do you actually end up writing off as uncollectible!! Terry Not many. Almost all eventually pay. It's just that they take so long! Suggest one or more solutions to Northern Construction Supplies Co.'s problem con- cerning the collection of accounts receivable