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Max can now see how both these systems work and can see the net sales method is much simpler to apply. He has asked you to explain why anyone would bother going to the trouble of analysing the ageing data for accounts receivable.

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1. Answer Maxs question for him.

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Max is still a little overwhelmed by the concepts involved in dealing with accounts receivable and wants to know why they are such a big deal. I just give my good clients credit and they pay me back as soon as they can. Occasionally some take a little bit too long or cant pay their entire bill, but thats just the way business works.

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2. Try and convince Max that proper management of accounts receivable is crucial to business survival.

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