More control and less work. Even in your industry.
Fast and secure invoice processing for every organization.
Fast and secure invoice processing for every organization
The debtors turnover days formula is a crucial financial metric for assessing the health of your company’s cash flow. It indicates how many days it typically takes for your customers to pay their invoices.
In this article, we explain what the debtors turnover days formula is, how to calculate debtor days, and how you can shorten this period to improve liquidity and reduce risk.
Table of contents:
The term debtor days refers to the average number of days it takes your clients to pay outstanding invoices. This metric—also known as debtor turnover days or debtors turnover ratio in days—is widely used by businesses, finance departments, and accountants to evaluate the effectiveness of receivables management.
A low number of debtor collection days means faster access to your cash. A high number could signal late payments, weak follow-up processes, or a lack of credit control.
A solid calculation helps you act on late payments before they impact your cash flow. The debtors turnover days formula is:
Debtor Days = (Average Accounts Receivable / Credit Sales) × 365
Example:
If your average accounts receivable is $50,000 and your annual credit sales are $300,000, then:
($50,000 / $300,000) × 365 = 60.83 days
In this case, your average debtor days would be about 61. That means you’re waiting roughly two months to receive payments. It’s a key KPI that should be monitored consistently—whether you’re using the standard method or the count back method debtor days approach.
Reducing the time it takes to collect payments from customers improves:
In most industries, debtor days between 30 and 45 are considered healthy. If your company consistently exceeds this range, it’s time to reevaluate your billing and collection processes.
Be upfront with your payment conditions from the start. Include these in both your quotes and invoices.
A fast and error-free invoicing process reduces delays. Automated reminders can keep customers alert and help reduce debtor turnover days.
Leverage dashboards and reports to track overdue invoices and payment trends. This allows you to intervene early.
Offer a small discount for payments made within a set number of days. This can motivate clients to pay faster.
Prevention is better than cure. Before accepting a new order, verify whether the customer is financially reliable.
Following up on payments manually takes time and resources. With Payt, you can automate the entire accounts receivable process—from invoicing to reminders and follow-ups.
You’ll save time and reduce your debtor days by 30–50% on average. Our software sends clear payment reminders, enables clients to pay online, and gives you full insight via detailed dashboards. You stay in control—Payt takes care of the rest.
Curious about the benefits of Payt? Download our brochure below or schedule a demo right away.
General brochure
5,000+ downloads | Read time: <5 minutes
Dental care brochure
2,000+ downloads | Reading time: <5 minutes
Pharmacy brochure
2,000+ downloads | Reading time: <5 minutes
Automotive brochure
400+ downloads | Reading time: <4 minutes
It depends on your sector, but 30 to 45 days is generally considered healthy.
Set clear terms, automate your invoicing, and use tracking tools. Software like Payt helps you manage the process more efficiently.
Payment terms are the agreed number of days to pay an invoice. Debtor days reflect how long it actually takes your customers to pay.
It saves time, reduces errors, and ensures quicker payments. You also maintain better control and transparency.
Your debtor balance is the total value of all unpaid customer invoices at a given moment.
Example:
If on September 1 you have $25,000 in outstanding invoices not yet past due, then your debtor balance on that date is $25,000.
