Working capital management

"Approximately 40 percent of short-term financing is in the form of accounts payable or trade credit."
"financial managers try to squeeze the last dollar of profit out of their cash management strategies." (Hirt, Block, and Danielsen, 2014, p. 192)

"Trade credit is usually extended for 30 to 60 days." (Hirt, Block, and Danielsen, 2014, p. 228)

Ross, Westerfield, and Jaffe (2014, p. 808):

The gap between short-term inflows and outflows can be filled either by borrowing or by holding a liquidity reserve in the from of cash or marketable securities. Alternatively, the gap can be shortened by changing the inventory, receivable, and payable periods. These are all managerial options that we discuss in the following sections.

Berk and DeMarzo (2007, p. 839):

A firm should strive to keep its money working for it as long as possible without developing a bad relationship with its suppliers or engaging in unethical practices.

Similar to the situation with its accounts receivable, a firm should monitor its accounts payable to ensure that it is making its payments at an optimal time. One method is to calculate the accounts payable days outstanding and compare it to the credit terms. The accounts payable days outstanding is the accounts payable balance expressed in terms of the number of days of coast of goods sold. If the accounts payable outstanding is 40 days and the terms are 2/10, net 30, the firm can conclude that it generally pays late and may be risking suppplier difficulties. Conversely, if the accounts payable days outstanding is 25 days and the firm has not been taking the discount, the firm is paying too early. It could be earning another five days' interest on its money.

Berk and DeMarzo (2007, p. 842):

Risky firms and firms with growth opportunities tend to hold a relatively high percentage of assets as cash. Firms with easy access to capital markets (for which the transaction costs of accessing cash are therefore lower) tend to hold less cash.

Berk and DeMarzo (2007, p. 842):

Large firms perform this analysis in-house with their own credit departments. Small firms purchase credit reports from credit rating agencies such as Dun & Bradstreet.

(continued)

A firm is legally obligated to pay cash dividends after its board of directors announce such a payment. The board of directors will also declare the record date, which is also called the book closure date. New shareholders have to register their identities to the firm by the record date so that they are qualified to receive the dividends. Because it takes three business days for new shareholders to be registered, only shareholders who purchase the shares at least three days prior to the record date receive the dividends. As a result, the date two business days prior to the record date is the ex-dividend date (Berk and DeMarzo, 2007, p. 532).

Bougheasa, S., S. Mateutb, and P. Mizen, 2009. Corporate trade credit and inventories: New evidence of a trade-off from accounts payable and receivable. Journal of Banking and Finance, 33(2): 300-307.
Liu, J.C., M. Yeats, and T. Lam, 2015. The Clustering of Shareholders’ Meeting Dates in Taiwanese Stock Markets. Cross-Strait Banking and Finance, Forthcoming. Available at SSRN: http://ssrn.com/abstract=2646344
Raheman, A. and M. Nasr, 2007. Working capital management and profitability—Case of Pakistani firms. International Review of Business Research Papers, 3(1): 279-300.