Both Hero and Zero work in the ice cream business. Hero adopts a more restrained approach to money management than zero.
Hero's Cash Management Policy:
1. Receive payment from customers before shipping product.
2. Monitor accounts receivable to ensure customers are paying on time.
3. Set payment terms for customers and enforce late fees/penalties for late payments.
Zero's Cash Management Policy:
1. Ship product to distributors upon receiving the order.
2. Monitor accounts receivable to ensure customers are paying on time.
3. Set payment terms for customers and enforce late fees/penalties for late
payments.
Business is an economic activity in which goods and services are exchanged for money. Businesses provide employment opportunities and help increase the wealth of a nation. The primary purpose of most businesses is to generate a profit for the owners, although some also strive to provide a positive impact on society. Businesses range from sole proprietorships to large corporations and operate in many different sectors. They generally involve a variety of activities such as production, marketing, sales, human resources, accounting and finance.
The main difference between the two policies is that Hero does not ship product until payment is received, whereas Zero ships product upon receipt of the order. Hero's policy is more conservative because it ensures that Hero receives payment before shipping product, reducing its risk of not getting paid. Zero's policy is more aggressive because it is taking on the risk of not getting paid, which can lead to losses if customers do not pay.
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