Part 2: Describe good financial practices in WORD (10 marks 300 - 500 words in total) [CLR 5, 6]

Background

KLE is growing. With this growth, Ken feels he is so busy getting new customers and keeping up with servicing his current customers that he has little time to determine what policies he should create so that the business follows good financial practices. He is mostly concerned about ensuring he develops a good credit rating as he believes the next phase of the company could require financing. Ken is also concerned with ensuring cash flow is managed well. He knows he has customers that pay on credit but is not sure if they are paying on time or if any customers are long overdue.

1. (6 marks) Describe three practices Ken must do to ensure he develops and maintains a good credit rating.

2. (4 marks) Describe two practices Ken must do to ensure that accounts receivables are being collected within the time allowed.