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A billing policy for credit customers
Author(s) -
Stowe John D.,
Miller Janis L.
Publication year - 1991
Publication title -
managerial and decision economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.288
H-Index - 51
eISSN - 1099-1468
pISSN - 0143-6570
DOI - 10.1002/mde.4090120508
Subject(s) - carry (investment) , fixed cost , period (music) , balance (ability) , fixed asset , business , economics , microeconomics , finance , production (economics) , medicine , physics , acoustics , physical medicine and rehabilitation
Firms frequently bill customers on a fixed‐period basis (such as once a month), or on a fixed‐amount basis (whenever the outstanding credit balance reaches a particular amount). We examine here a more flexible procedure, the bill‐or‐carry policy, which uses a simple decision rule and results in lower costs than either the fixed‐period or fixed‐amount procedures. The logic and properties of the bill‐or‐carry policy are compared with those of the fixed‐period and fixed‐amount procedures.