Accounts receivable turnover definition and how to improve it

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Do you know what accounts receivable turnover is? It is one of the types of collection indicators that you must keep in mind if you want to be successful with your collection and for your company to enjoy the liquidity necessary for its growth.

In this post from Moonflow, the billing system software, we tell you more about this important collection ratio .

What will you find in this text?

What is meant by accounts receivable turnover?

Accounts Receivable Turnover Calculation

Accounts receivable turnover example

How to interpret accounts receivable turnover?

How to improve accounts receivable turnover?

1. Implementing debt collection software

2. Improving the frequency and quality of monitoring accounts receivable turnover

3. Having efficient credit and collection policies

What is meant by accounts receivable turnover?
Accounts receivable turnover is also known as debtor turnover. It is buy targeted email list known by the acronym RCC. But what does it refer to exactly? The time that passes between the moment your company grants credit to a client and the moment that client pays it.

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Accounts Receivable Turnover Calculation
To calculate accounts receivable turnover , you need to know two things: net credit sales and the average accounts receivable during the period.

Once we have these values, what we must do is divide the net credit sales by the average accounts receivable, within the same period.
But what is each value equivalent to?:

Net credit sales : These are the sales you made on credit during a given period, not including returns or discounts. For example, if in a period you sold S/.50,000 on credit and there were no returns or discounts, your net credit sales are S/.50,000.