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Pacific Apparel Ltd. is a local clothing wholesaler specializing in undecorated clothing for men and women. Their customer base consists of retailers looking to screen
Pacific Apparel Ltd. is a local clothing wholesaler specializing in undecorated clothing for men and women. Their customer base consists of retailers looking to screen print white-labelled shirts. At the end of 2018 management noticed that their receivables were significantly exceeding the industry benchmark of 37 days to collect. Rather than offering their customers additional discounts for faster repayment, management decided to incentivize employees to reduce average receivables turnover days. They trained employees to increase post-sale communication and updated the bonus structure to include an additional bonus based on the percent reduction in days to pay. The new program saw success in its first year; with the days to collect decreasing from 2018 levels. Management has engaged you to dig deeper to see if anything more can be done to bring days to pay even closer in line to the industry benchmark
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