Your Accounts Receivables represent one of your largest assets. If you extend credit terms to your customers, learn how to manage this asset in a way that provides the best benefit to your company.
How well are you managing your accounts receivables? Mismanaging your accounts receivables is costly. When you extend credit terms to your customers, you are giving them an interest free loan and increasing the risk that these accounts will not be collected.
The Accounts Receivables turnover ratio measures the efficiency of your company’s collection efforts. It is a measure of the number of days it takes to collect your accounts receivables. Accounts Receivables turnover is the average duration of accounts receivables equal to total credit sales divided by accounts receivable. Accounts Receivables turnover quantifies a company’s effectiveness in extending credit and collecting debts.
