Include possible expenses in the company's budget

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If part of the receivables becomes uncollectible, i.e. unpaid, or the creditor has to start legal proceedings with the counterparty, the company will lose money. It is better to plan for these expenses in advance so as not to take them from working capital.

Calculate the turnover ratio. This is an indicator that allows you to understand how effectively a business manages the receipt of receivables for a certain period.

The coefficient can be calculated, for example, for a year or a quarter. south africa telegram data Depending on the industry and the specifics of the company's work, the result may be different - there are no generally accepted values. Turnover is calculated using the formula:

Revenue for the billing period ÷ Average balance of accounts receivable

The higher the turnover ratio, the more effectively the organization has organized the process of receiving payments from counterparties. Based on the calculations, statistics can be collected. For example, if the ratio has decreased compared to previous reporting periods, debtors may be late with payments or bad debt has appeared.