Receivables Metrics
Or use: (Opening Debtors + Closing Debtors) ÷ 2
Total revenue generated through deferred payment terms
Days
DEBTORS COLLECTION PERIOD
Debtors Turnover Ratio
Cash Flow Velocity
Debtors Turnover Ratio Formula: Net Credit Sales ÷ Average Trade Debtors.
Collection Period Formula: (Average Trade Debtors ÷ Net Credit Sales) × Number of Days in Period.
Strategic Takeaway: A shorter collection period highlights aggressive billing collections and creditworthy clients, reducing working capital constraints. Lengthy windows risk transforming assets into toxic bad-debt write-offs.
💸
Provide operational debtors and credit sales entries to evaluate outstanding cash realization metrics.
