Is cash flow affected

by dolores pauker
(los angeles, ca, usa)

Q: Is cash flow affected for a company when they have entered into a terms agreement with their customers and no longer receive cash upfront, but sales also increases?

A: Yes this would definitely affect cash flow as there is less cash upfront and more later on.

If it takes your company a lot of time to deliver a service or product to a customer, such as a construction project, the change in the terms could mean you receive the majority of the cash payment for a transaction in the year following the original year in which the construction was begun (as it takes a long time to complete the construction). On the other hand, if products or services are delivered quickly by your company, it would not make much difference to your cash flow.

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