Un 28 July 2021, TechSpecialist delivered IT equipment to the Thulamela Municipality and issued an invoice of R800 0 for this sale. TechSpecialist could not afford to wait 60 days for the pay, so they approached a factoring house to discor this debtor them. If TechSpecialist does not receive the advance from the factoring house, it stands a chance of ne surviving through to the next financial quarter due to serious cash flow constraints. On several occasions, the Thulame Municipality has defaulted on trade debts due to budgetary constraints. The factoring house agreed to advance them 80% of the invoice amount. 20% of the invoiced amount will fall due to the factoring house. The Thulamela Municipality deb will serve as collateral on the advanced amount. Additional Information: The factoring house will follow up on the debtowed by the govemment and collect the payment from the Thulamela Municipality on behalf of TechSpecialist. The factoring house will charge an effective interest at a rate of 10% perannum on the amount advanced, and interest will accrue daily, for every day the amount is unpaid. The factoring house will also levy a management fee of 1.5% of the amount advanced. The factoring house charges an EFT amount of R200 for transferming the loan amount There is also a penalty charge of 1% on the advanced amount if the Thulamela Municipalty does not sette the debt within 60 days. TechSpecialist will benefit from not having to employ 4 debtors' clerks for their debtors departinent br the 60 -day period. They would have paid each clerk R15 000 per month. Savings on the telephone and fax-related collection costs made by TechSpecialist would amount to R6 500 per month. TechSpecialist would save R8 000 per month on the rental of additional space for the deblors departinent The Thulamela Municipality eventually paid the full invoice on 30 September 2021. Assume a year consists of 360 days and a month consists of 30 days. TechSpecialist (Pty) Ltd has been struggling with its cash flow due to customers defaulfing on their debls. Managament has decided to strengthen its credit management policies. The first policy that management dectlat to strenghen is the creditworthiness checks for any new customers as managementidentified this area as a weakness. Required a) Calculate the actual cost/saving for TechSpecialist (Pty) Ltd as a result of the factoring arangement (13 Marks) b) Discuss the other factors that TechSpecialist (Pty) Ltd should have considered in making the decison b bector the R800 000 Thulamela Municipality invoice, AND commentifit made a correct decision c) Identify the key procedures that management should follow in assessing the credewortiness of's sew customers. d) Discuss the reasons why TechSpecialist (Pty) Lid may decide to hold cash. ( 5 Marks) (4 Marks) Un 28 July 2021, TechSpecialist delivered IT equipment to the Thulamela Municipality and issued an invoice of R800 0 for this sale. TechSpecialist could not afford to wait 60 days for the pay, so they approached a factoring house to discor this debtor them. If TechSpecialist does not receive the advance from the factoring house, it stands a chance of ne surviving through to the next financial quarter due to serious cash flow constraints. On several occasions, the Thulame Municipality has defaulted on trade debts due to budgetary constraints. The factoring house agreed to advance them 80% of the invoice amount. 20% of the invoiced amount will fall due to the factoring house. The Thulamela Municipality deb will serve as collateral on the advanced amount. Additional Information: The factoring house will follow up on the debtowed by the govemment and collect the payment from the Thulamela Municipality on behalf of TechSpecialist. The factoring house will charge an effective interest at a rate of 10% perannum on the amount advanced, and interest will accrue daily, for every day the amount is unpaid. The factoring house will also levy a management fee of 1.5% of the amount advanced. The factoring house charges an EFT amount of R200 for transferming the loan amount There is also a penalty charge of 1% on the advanced amount if the Thulamela Municipalty does not sette the debt within 60 days. TechSpecialist will benefit from not having to employ 4 debtors' clerks for their debtors departinent br the 60 -day period. They would have paid each clerk R15 000 per month. Savings on the telephone and fax-related collection costs made by TechSpecialist would amount to R6 500 per month. TechSpecialist would save R8 000 per month on the rental of additional space for the deblors departinent The Thulamela Municipality eventually paid the full invoice on 30 September 2021. Assume a year consists of 360 days and a month consists of 30 days. TechSpecialist (Pty) Ltd has been struggling with its cash flow due to customers defaulfing on their debls. Managament has decided to strengthen its credit management policies. The first policy that management dectlat to strenghen is the creditworthiness checks for any new customers as managementidentified this area as a weakness. Required a) Calculate the actual cost/saving for TechSpecialist (Pty) Ltd as a result of the factoring arangement (13 Marks) b) Discuss the other factors that TechSpecialist (Pty) Ltd should have considered in making the decison b bector the R800 000 Thulamela Municipality invoice, AND commentifit made a correct decision c) Identify the key procedures that management should follow in assessing the credewortiness of's sew customers. d) Discuss the reasons why TechSpecialist (Pty) Lid may decide to hold cash. ( 5 Marks) (4 Marks)