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cost.
Second, in November 1982, Cascade hired a new controller,
Lee Fromson (Fromson), who implemented certain changes in
Cascade's financial operations that improved its cash-flow during
1983. For instance, Fromson introduced the corporation to
computers, which Cascade used to automate its system of
accounting for sales and receipts. To quickly improve the
corporation's cash-flow, Fromson hired a full-time credit manager
who expeditiously collected the accounts receivable and a
purchasing manager who negotiated more favorable prices and
payment terms with the corporation's vendors.
Most importantly, to fund Cascade's growth, Fromson
negotiated with the bank for an increased line of credit at a
lower rate of interest, and he convinced the corporate officers
to use it. The credit limit was increased to $125,000 in April
and to $150,000 in June 1983, and the initial interest rate was
fixed at 11.5 percent. For the years 1983 through 1986, the
credit limit was increased to $300,000, and in 1987 it was
increased to $500,000. These lines of credit were secured by,
and limited to the value of, Cascade's accounts receivable and
its finished goods inventory.
The improved cash-flow allowed Cascade to pay its officers
and to become current on its patent payment obligations under the
1982 agreement at the same time it improved its manufacturing
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