Insights & Advice From Bank Of Tennessee

Advice

Accounts Receivable Analysis

Accounts receivable are monies owed to your business for goods or services delivered to a customer, but not yet paid for. Successful businesses collect money that is owed to them in a timely and efficient manner. Having too much money tied up in receivables means you're not collecting the cash to pay for the goods or services you've provided. Not extending credit may impact sales. The 'Receivables Turnover Ratio' measures a businesses effectiveness in extending credit and collecting debt. The higher the ratio, the more effective the business is in dealing with its receivables. The accounts receivable to sales ratio looks at the amount you have tied up in receivables in comparison to your same period sales. The Average Collection Period shows how long, on average, it takes for you to collect your debts.

Please Note: Information and interactive calculators are made available only as self-help tools for your independent use and are not intended to provide investment or tax advice. We cannot and do not guarantee their applicability or accuracy in regard to your individual circumstances. All examples are hypothetical and are for illustrative purposes. We encourage you to seek personalized advice from qualified professionals regarding all personal finance issues.