Debtor Days Calculator
The debtor days ratio focuses on the time it takes for trade debtors to settle their invoices. A high figure may suggest general problems with debt collection or the financial position of major customers. The efficient and timely collection of customer debts is a vital part of cash flow management, so this is a ratio which is very closely watched in many businesses.
How are debtor days calculated?
To calculate debtor days you need to divide amount owed to the company with total sales/revenue generated and multiply by 365.
Why debtor days calculation is useful?
To ensure your business maintains a healthy cash flow the debtor days calculation is useful way to provide you with indication how quickly your customers are settling their invoices. High value of debtor days calculation indicates problem with your customers paying for the goods/services.