Abstract
M.Comm.
Many organisations that go out of business often mention cash flow as an explanation
for the organisation's failure. These organisations usually generate an acceptable level
of turnover, their pricing structures are accurate and costs under control, but they are
owed too much money which is not collected on time. Debtors form a major part of a organisation's working capital and even if the total outstanding debt is collected eventually, it tends to erode organisation profits if it is not collected as per agreed upon terms. Organisations should therefore formulate policies that would improve cash flow, encourage prompt collection of debt and reduce costs of collecting such debt. There are two types of strategies that retailers operating within the South African clothing industry can choose from, namely, in-house credit control and factoring. The main purpose of this paper is to explore these strategies in detail and weigh their benefits and limitations as applicable to organisations that operate within the clothing sector of the economy.