Having recently been promoted to Financial controller the company want me to instigate some reporting on debt control and its effectiveness. How can I do this? One way is obviously size of debt but our turnover is increasing. One way would be %of turnover but that doesn't show how quickly debt is being paid off.
Paul Smith
3 Responses
Accountingweb
Paul,
i reccommend you post this question into our other community Accountingweb.
https://www.accountingweb.co.uk
with over 65,000 members im confident somone will be able to help you
Debtor Days
Paul
We used to log (and compare monthly ) number of debtor days – that is, by how many days payment was made late – that way, the amount, % etc was not relevant, just the fact that they had paid / hadn’t by due date. Hope this helps
Andrea
Debtor days
One way is to calculate your “debtor days”. This tells you, on average, how many days it’s taking your company to get paid by its customers.
Divide your debtors (i.e. the amount of money owed to your company on any day) by your sales per day (Take the annual sales/365).
You will get a figure such as 47 days. If this figure decreases over time, then your debtor control is improving.