How To Calculate Debtor Days On A Monthly Basis. Debtor days formula is used for calculating the average days required for receiving the payments from the customers against the invoices issued and it is calculated by dividing trade receivable by the annual credit sales and then multiplying the resultant with a total number of days. Try our free debtor days calculator below.
To give you an example, say abc' 3 months dealings are as follows: (debtors £40k / sales £35k) x 365 / 12 = 34.7 days ? If your debtor days are increasing beyond your normal trading terms it indicates that the business is not collecting debts from customers as efficiently as it should be, or perhaps terms are being extended to boost.
