Equity Investments in Crowdfunding Projects †MyAssignmenthelp.com

Question: Discuss about the Equity Investments in Crowdfunding Projects. Answer: Introduction This report contains data related to credit policies and methods which could be used by organizations for the collection of cash. It is prepared under the guidance of the group leader who will give instructions and all the members of the team will be accustomed to act as per his instructions. The group leader has helped team members to collect the required amount of data from reliable sources for preparing cash policies and cash collection methods. With the increasing ramification and fast changes in economic conditions, it is observed that management of cash and finance is required for the business functioning of organizations. In this report, an adamantine study has been prepared on two types of business organizations. There are several factors which affect the credit policies and methods which could be used by organizations for the collection of cash. There are two organizations namely first is a large hotel serving liquor and meals and another one is the large manufacture of leis ure footwear. Both companies are different in nature and accompanied with different complexity of business (Abor, 2017). Organizations are accompanied with several set of activities in which various functions are performed in order to achieve certain level of goals and objectives. Credit policies are developed with a view to increasing the overall turnover of organizations. These policies help organizations to set out the terms and conditions of business and how to deal with their customers and clients in determined approach. Organizations use a number of policies to mitigate the credit risk and boost sales. However, inefficient credit policies may result in customers default and losses of the business. Credit policies of hotel serving liquor and meals together with the provision of motel style accommodation to the traveling public Credit policies of the hotel serving liquor and meals will be based on its clients and their reciprocate behavior. It is assumed that all the customers are in liquor business are more inclined towards not paying their debts and keeping themselves in debt amount. However, there are several points which could be taken into account by hotel serving liquor and meals while setting up its credit policies. Credit limit- Hotel serving liquor and meals would need to set out the maximum limit to which it could allow credit to its clients. In addition to this, in the hospitality industry clients are given all the services on credit and asked to make payment only after when they have availed and satisfied their services. Hotel serving liquor and meals could enhance their credit payment cycle for the certain customers who are having a good amount of track record (Healy Palepu, 2012). Credit term- It is evaluated that in the hospitality industry customers are given all the services on credit and asked to make payment only after when they have availed and satisfied their services. Therefore, hotel serving liquor and meals would have credit policies of taking payment from the clients only when they have availed the services provided by organizations (Hirschey, 2008). Clients information- It is evaluated that if clients in the hotel serving liquor and meals come on frequent basis then in order to boost the sales organizations would allow customers to take credit purchase of liquor and other substance. However, hotel serving liquor and meals needs to set up a limit for determining up to which extent clients would be allowed to take credit. Documentation- Ideally in business of hotel serving liquor and meals, organizations do not maintain proper data for their clients such as contract, amount of credit sales, purchase orders. Therefore, it is assumed that only a sheet is maintained by the management department to determine the credit amount due to particular clients. After analysis the liquor market, it is observed that there are very less number of hotels offering motel rooms and liquor to the general public due to its high regulatory requirement and high fixed investment. In addition to this, they focus on direct customers who frequently visit and less inclined towards entering into same hotels. Therefore it could be inferred that hotel serving liquor and meals are more inclined towards generating cash sales and make less focus on credit sales due to their credit policies. However, credit sales could also be allowed by hotels to their regular clients (MOHAMMED KEDIR and ALEWI, 2014). Credit policies of large manufacture of leisure footwear, supplying shoes to a large number of independent footwear retails functioning through their shops These are several organizations that are making strategic alliance with retail business organizations to sell their stocks and products in market. The credit policies of large manufacture of leisure footwear, supplying shoes are very liberal and they are more inclined towards allowing their clients to purchase more and more products. In addition to this, it is also observed that there are high numbers of suppliers in footwear industry who are providing leisure footwear, supplying shoes to retails business organizations (Hargovan Harris 2011). It is further evaluated that retails business organizations do not have that much cash and they purchase stocks and goods only from those suppliers who provides them stock on credit terms. Therefore, in order to cope up with the market, all manufactures who are providing leisure footwear, supplying shoes to retails stores would agree on credit sales. However, in order to maintain effective credit policies, organization selling leisure footwear, supplying shoes should create operating life cycle by entering into contract with their clients. This type of process not only increase the overall profit of organizations but it also helps manufactures of leisure footwear, supplying shoes to establish an effective strategic alliance with other business organization. These manufacturers will have a high number of debtors in their balance sheet (NJENGA, 2014). However, these manufacturers would need to manage their receivables otherwise it may result into increment in the cost of capital and eventually will affect the cost of production of manufacture of leisure footwear, supplying shoes (Cholakova Clarysse, 2015). Differences between the credit policies prepared by these two organizations It is evaluated that hotel serving liquor and meals to its customers will have credit policies which will keep its credit sales as low as it could be. It is analyzed that hotel serving liquor and meals never want to increase its sales by increasing its credit sales. Companies indulged in serving liquor and meals to its customers are more inclined to deliver the best quality of services and less inclined to manipulate its credit sales to increase the overall turnover. On the other hand, manufacturers who provide footwear and supplying shoes to retails business stores are more inclined towards setting up an effective strategic alliance with their partners. Therefore, it is evaluated that credit policies and conditions set up by manufacturers that provide footwear and supplying shoes to retails business stores in their business are more liberal and more clients oriented. These types of policies are developed with a view to prepare strategic plan to compete with other suppliers in the ma rket. Therefore, in the end it would be inferred that manufactures who provide footwear and supplying shoes to retails business stores would have more liberal policies than Hotel business organizations offering liquor and other meals (Brigham Ehrhardt, 2016) There are several methods which could be used by credit manager in monitoring the status and composition of account receivables in both types of organizations (Raymond and Adigwe, 2015). Ratio analysis for control of receivables This analysis establishes the relation between two associated factors such as overall turnover and average receivable of organizations. However, organizations follow these methods to identify the maximum debt collection time which they could allow and maximum level of the total amount of credit sales which could be allowed (Black Gilson, 1998). The Ageing schedule of debtors is prepared basing on the collection period. Total amount of debtors are classified according to their age. This age analysis is used to decide what actions could be taken about older debts. Both organizations could use ageing analysis according to their period of outstanding, For instance, less than 30 days, 45 days and 75 days. This method could be implemented either manually or through computers (Selvanayaki et al. 2016). This analysis is used to maintain and prepare an effective control of inventories. Management of inventory an effective manner would result into effective management of receivables and would also reduce the cost of capital (Beck, 2016). These credit scoring will help both organizations to help organizations to measure the clients so that they could consider to whom they should allow credit sales. However, in these methods, both organizations would need to consider the track record and their business relation with their clients before allowing credit sales. Written plan for both companies It is the responsibility of finance manager to manage its receivable and cash accounts of the hotel serving liquor and meals. As this business is less inclined towards making credit sales to its customers due to high risk involved in the collection of payment. It is evaluated that the hotel serving liquor and meals would keep the interest rate @ 26% for its credit sales. If the hotel serving liquor and meals would make credit sales due to unexceptional circumstance then it will have debtors collection period of 60 days maximum. The company would also prepare bad debts provision for covering up its possible losses. However, finance manager would keep all the credit charges high and will force its clients to make payment hand to hand without any delay (Jonny, 2016). Manufacture of leisure footwear, supplying shoes needs to hold liberal business policies. It is evaluated that manufacture of leisure footwear, supplying shoes needs to provide all its goods on credit basis to retails business stores. The manufacture would keep the interest rate very low @ 10% for its credit sales. Debtors collection period for the clients who have purchased goods on credits terms would be around 120 days. However, retails business stores who are ready to make payment before their due date would be given additional discounts and offers. Manufacture would need to keep high amount of debt provision in its balance sheet for its contingent liabilities and bad debts losses (Barton Wiseman, 2014). Conclusion There are different types of cash policies and methods for collection of cash which are discussed in this report. 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