Tuesday, April 3, 2012


AMC stands for Annual Maintenance Contract. These are contracts for one year period
towards service and maintenance of the equipment/s. The contract amounts are usually
collected in advance.

It is to be noted that the equipment covered by the contract may fail anytime during
the one year period and the service provider must have adequate money to buy the
parts required.

What I used to do in my line of business was to convert such income into finished
goods. The money in the bank is not going to accumulate any interest. So why not
have it in the form of finished goods. This will also facilitate getting cash discounts
from the supplier.

Occasionally I used to offer air-conditioners on three to five months interest free
instalments to known customers. This way the sale would also increase and the same
time there will be regular cash inflows to the company.

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