Effective credit management involves establishing credit standards for extending credit to customers, determining the company's terms of credit, and setting up procedures for invoicing and collecting past$-$d$$e accounts.

The following statement refers to a credit management policy. Select the best term to complete the sentence.

A company's to how the company handles its credit accounts. This includes methods of invoicing and collecting pastdue accounts.

Consider the case of the Sharp Company:

The financial managers at the Sharp Company have been monitoring the company's receivables and have compiled the following information:

All sales are on credit. Sharp's current terms are $2/10$ net $30.$

$10\%$ of Sharp's customers take advantage of the discount.

Payments from its remaining customers are received, on average, in $53$ days.

Estimated credit sales are $$160\mathrm{.}000$ million annually.

Variable costs are $82\%$ of gross sales.

Credit evaluation and collection costs are $10\%$ of gross sales.

There are no bad debts to consider in this analysis.