• Skip to main content
  • Skip to footer

Abbotts

  • Home
  • About Us
    • Abbotts History
    • Our People
      • Directors
        • Andre Parker
        • Bez Esquivel
        • Bradley Abbott
        • Briony Knott
        • Christopher Higham
        • David Drake
        • Eric Ballard
      • Associates
        • Melissa Hansen
        • Stephen Hollyock
      • Client Managers
        • David Chang
        • Elliot Moses
        • Gabrielle Zonato
        • Vishen Bisnath
      • Finance Brokers
        • Bez Esquivel
      • Financial Advisers
        • Andre Parker
        • Amanda Kirkpatrick
        • Briony Knott
        • Fiona Chua
        • John Donald
        • Michelle Baker
      • Accountants/Bookkeepers
        • Angeline Camaya
        • Lewis Grant
        • Debbie Byrnes
      • Administration
        • Anne Abbott
        • Jaymee Sunder
        • Kevin Thomson
    • Careers
    • Our Philosophy
    • Social Responsibility
    • Testimonials
    • Our Clients
  • Services
    • Taxation Services
      • Taxation Compliance
      • Strategic Planning
      • Capital Gains Tax (CGT)
      • Fringe Benefits Tax (FBT)
      • Goods & Services Tax (GST)
      • Business Structures
      • Research and Development
      • Foreign Taxes
      • Tax Deductions
      • Tax Audit
    • Business Services
      • Commence a Business
      • Run a Business
      • Succession Planning
      • Advisory Services
      • Systems Integration and Support
      • Corporate Secretarial
      • HR and Payroll
    • Finance Broking
      • Loan and Borrowings
      • Venture Funding
      • Debt Management
    • Wealth Management
      • Establish Your Wealth
      • Execute Your Strategy
      • Maintain Your Strategy
      • Strategies and Structures
    • Superannuation
    • Bookkeeping
      • MYOB Bookkeeping
      • MYOB Setup and Training
      • Xero Bookkeeping
      • Systems Integration and Support
      • HR and Payroll
  • Industries
    • Farming and Agribusiness
    • Supermarkets
    • Medical
    • Construction
    • Pharmacy
  • Insights & News
  • Client Portal
    • Make a Payment
    • myprosperity
    • MYOB Document Portal
    • Resources
  • COVID-19 Hub
  • Contact Us
You are here: Home / Advisory & Business Services / Analyse your business with the debtors days method

Analyse your business with the debtors days method

July 17, 2019 By Aaron Davidson

Ratio analysis is a method of gaining insight into a company’s liquidity, efficiency and profitability by comparing the information contained in its financial statements.

Debtor days is one key measure of ratio analysis. It shows the average number of days that a business takes to collect invoices from their customers. The longer it takes to collect, the greater the number of debtor days.

The formula for working out debtor days is:

(Trade receivables ÷ Annual credit sales) x 365 days

When debtor days increase beyond normal trading terms, it indicates that the business is not collecting debts from customers as efficiently as it should be. If you aren’t getting paid, you won’t be able to upkeep your resources to continue servicing clients.

There are a number of small strategies you can implement to reduce your debtor days. These include:

  • Starting the collection process as soon as the debt falls due, don’t wait until after the terms are exceeded to collect from customers.
  • Creating easy ways of payment, such as PayPal or other online methods.
  • Considering online software that provides options for automated follow ups on due debts.
  • Offering small discounts on current or future purchases as an incentive for clients to pay on time.

You want to know what is happening in your business and where improvements can be made – we can provide you the platform to actively engage in the data your business produces enabling you to make the correct decisions for your business future.

For more information about our services, please get in touch – details can be found on our contact us page.

Filed Under: Advisory & Business Services Tagged With: advisory, business advice, management accounting, metrics

Aaron Davidson

Footer

Connect with Abbotts Group

+61 8 9321 2642

+61 8 9322 1385

recep@abbotts.net.au

PO Box 414, West Perth WA 6872

813 Wellington Street, West Perth WA 6005

Abbotts

Disclaimer | Terms of Use | Privacy
Liability limited by a scheme approved under Professional Standards Legislation.
Abbotts Wealth Management Pty Ltd (AFSL 303138)
Abbotts Finance Brokers Pty Ltd (ACL 467436)

Our Services

Taxation Services
Business Services
Finance Broking
Wealth Management
Superannuation
Bookkeeping

Copyright © 2022 · Gallery Pro on Genesis Framework · WordPress · Log in