Strategic Planning & Analysis Flashcards

A company's beginning receivables were $500,000, monthly credit sales $300,000, ending total receivables $450,000, and ending current receivables $250,000. What is the CEI?

Answer: About 63%

CEI = (500k + 300k − 450k) ÷ (500k + 300k − 250k) = 350k ÷ 550k ≈ 63.6%.

What is the main purpose of a receivables aging report in strategic planning?

Answer: To reveal the distribution of balances by days past due and spot deteriorating trends

Aging reports group balances by time past due, highlighting where risk is concentrating.

When forecasting cash collections for the next quarter, the most reliable method is usually to:

Answer: Apply historical collection curves by aging bucket to current balances

Historical payment patterns by aging bucket provide a data-driven basis for cash forecasts.

A collection manager notices recoveries dropped after a new vendor was hired. Before terminating the vendor, what should be done first?

Answer: Analyze placement quality and age to ensure a fair comparison

Performance should be compared on like-for-like placements, since older or weaker accounts naturally recover less.

Which is an example of a leading indicator for future collection performance?

Answer: Broken promise-to-pay rate in early-stage accounts

Rising broken promises signal future delinquency before it shows up in write-offs.

In capacity planning, if each collector can effectively work 120 accounts per day and 3,000 accounts require daily contact, how many collectors are needed?

Answer: 25

3,000 ÷ 120 = 25 collectors.

Which practice best supports a continuous-improvement culture in a collection department?

Answer: Regularly reviewing results, root-cause analysis, and adjusting strategies

Continuous improvement relies on an ongoing cycle of measuring, analyzing, and refining.