Credit Management and Markov Chains: Modified Total Balance Aging Method

Abstract

Firenza Associates produces highly specialised loudspeaker equipment for a very small number of customers, who purchase from it on credit. At the end of May 1989 it had twelve credit customers, whose accounts stood as follows, with all figures in thousands of pounds: Customer account no. Owed from May invoices Owed from April invoices Owed from invoices in or before March 1 10 — — 2 9 2 — 3 — — 7 4 5 6 3 5 6 11 — 6 13 15 2 7 — 8 16 8 7 4 — 9 — — 12 10 16 — 4 11 — 10 — 12 7 14 5