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Debtor Days Calculator

Calculate average collection period for debtors.

Debtor Days Calculator

$

Average amount owed by customers

$

Total credit sales for the year

Time period for calculation

Results

Debtor Days:
Daily Credit Sales:
Collection Efficiency:

Industry Benchmark

Excellent: ≤ 30 days
Good: 31-45 days
Average: 46-60 days
Poor: > 60 days

Formula

Debtor Days = Average Accounts Receivable
Daily Credit Sales
Daily Credit Sales = Annual Credit Sales ÷ Period (days)

Where:

  • Average Accounts Receivable: Average amount customers owe
  • Annual Credit Sales: Total credit sales for the period
  • Period: Number of days in the period (typically 365)

Usage Guide

What it measures:

Debtor days (also called Days Sales Outstanding) measures the average number of days it takes to collect receivables from customers.

How to calculate:

  1. Enter your average accounts receivable balance
  2. Input your annual credit sales figure
  3. Select the appropriate time period
  4. Review the calculated debtor days

Interpretation:

  • Lower is better: Faster collection of receivables
  • Compare to credit terms: Should align with payment terms
  • Industry comparison: Benchmark against competitors
  • Trend analysis: Monitor changes over time

Example Calculation

Sample Company:

Average Accounts Receivable: $50,000
Annual Credit Sales: $365,000
Period: 365 days
Daily Credit Sales = $365,000 ÷ 365 = $1,000
Debtor Days = $50,000 ÷ $1,000 = 50 days

This means customers take an average of 50 days to pay their invoices, which is considered average performance.

Tips for Improvement

Reducing Debtor Days:

  • Offer early payment discounts (2/10 net 30)
  • Implement stricter credit policies
  • Send invoices immediately upon delivery
  • Follow up on overdue accounts promptly

Collection Strategies:

  • Automate invoice processing and reminders
  • Require deposits for large orders
  • Use factoring for immediate cash flow
  • Review customer creditworthiness regularly

Monitoring:

  • Track monthly to identify trends
  • Segment by customer type or region
  • Compare to industry benchmarks
  • Set targets for improvement

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