Companies are increasingly attempting to replace or expound product-orientated strategies by customerorientated
strategies. For this reason, the quantification of customer relations within the scope of the
balanced scorecard is increasingly achieving significance as an implementation instrument for strategies
and as a supplement to classic product profitability analysis.
As the head of accounting, Dan took pride in the efficiency of his
department. Just recently, he and his team had significantly reduced the
time between billing and receiving. The resulting improvement in cash
flow resulted in a team award from management. So he was a bit
annoyed when Janet, his old friend in marketing, told him about her
latest market research. "Customers find their statements confusing," she
said. "They seem to be paying the bills," Dan countered, "and we
manage to keep track of the money, what more do we have to do?" She
The authors study the effect of financial crises on trade credit in a sample of 890 firms in six emerging economies. They find that although provision of trade credit increases right after the crisis, it consequently collapses in the following months and years. The authors observe that firms with weaker financial position (for example, high pre-crisis level of short-term debt and low cash stocks and cash flows) are more likely to reduce trade credit provided to their customers.
The emergence of the derivatives market has led to the creation of investment securities with
complex cash flow profiles. Investment professionals, using derivatives, can customize a
security’s structure to the investor’s risk/reward profile of choice. As a result, investors now
have more investment choices. The increasing complexity of many of the securities, however,
has complicated asset/liability risk measurement and management decisions.
We begin with an assumption about the sales generating process rather than the operating cash flow generating process because the sales contract determines both the timing and amount of the cash inflows (and often related cash outflows) and the recognition of earnings. The sales contract specifies when and under what conditions the customer has to pay. Those conditions determine the pattern of cash receipts and so the sales contract is more primitive than the cash receipts.
The body of property rights literature provides a general framework for analyzing
the determinants of corporate share ownership structures.4 The literature emphasizes the
roles of customs, social norms, and law and legal systems in shaping the structure of
property rights and their governance systems. Corporate share ownership can be viewed
as a property rights arrangement through which the owner of the share is entitled to three
categories of property rights. First, the owner has the decision right of deploying
corporate assets, i.e., the control or voting right.