Profit margins will continually be affected by the rising operating costs of a business and all industries and most businesses, credit providers and consumers will be affected. This allows charging of interest on overdue accounts to become more popular.
Executive management use variances between budgets and actual performances to monitor the progress of a business towards obtaining its corporate profit objectives.
Hidden costs are also known to exist which are detrimental to the profits of the business, yet they are ignored for fear of competitor reaction and customer relations. The loss of income on overdue accounts is one of those hidden costs.
Loss of income as a result of slow paying customers could be responsible for the biggest loss of profits.
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