Reference no: EM13585661

Here is the Scenario that we are to comment on:This week%u2019s Discussion focuses on Activity 6-2 located on page 240 of your textbook which reads as follows:

The following is an excerpt from a conversation between the office manager, Mark Cottman and the president of Horowitz Construction Supplies, Co., Rosa Mullin. Horowitz sells building supplies to local contractors.

Mark: Rosa, we%u2019re going to have to do something about these overdue accounts receivable. One-third of our accounts are over 60 days past due, and I%u2019ve had accounts that have stayed open for almost a year!

Rosa: I didn't realize it was that bad. Any ideas?

Mark: Well, we could stop giving credit. Make everyone pay with cash or a credit card. We accept MasterCard and Visa already, but only the walk-in customers use them. Almost all of the contractors put purchases on their bills.

Rosa: Yes, but we've been allowing credit for years. As far as I know, all of our competitors allow contractors credit. If we stopped giving credit, we%u2019d lose many of our contractors. They%u2019d just go elsewhere. You know, some of these guys run up bills as high as $60,000 or $80,000. There's no way they could put that kind of money on a credit card.

Mark: That%u2019s a good point. But we've got to do something.

Rosa: How many of the contractor accounts do you actually end up writing off as uncollectible?

Mark: Not many. Almost all eventually pay. It's just that they take so long!

Suggest one or more solutions to Horowitz Construction Supplies Co.'s problem concerning the collection of accounts receivable.