Which of the following best describes reverse cash flow?

Disable ads (and more) with a premium pass for a one time $4.99 payment

Study for the Certified Supply Chain Professional (CSCP) Practice Exam. Prepare with multiple choice questions, each accompanied by hints and explanations. Get ready to ace your exam!

Reverse cash flow typically refers to the cash effects that involve the reduction of cash inflows due to certain financial activities, particularly in the context of accounts payable and receivable. In this regard, credits and discounts issued to customers or other stakeholders represent a reduction in cash that the business would otherwise receive from sales. This adjustment to cash flow reflects a situation where, instead of receiving full payment, the company provides incentives such as discounts or credits, decreasing the total cash inflow.

Understanding this concept is crucial for managing working capital effectively; it highlights the impact of pricing and promotional strategies on the overall cash position of a business. By analyzing reverse cash flow, businesses can evaluate the effectiveness of their pricing tactics and customer relations strategies, ultimately leading to improved financial management.

Subscribe

Get the latest from Examzify

You can unsubscribe at any time. Read our privacy policy