The Expert View
Cashflow is the lifeblood of your business. Yet, if your business provides credit to your customers, for 30 or more days your cash is in the hands of those customers, not your business!
Debtor Days is the measure of the speed of Cash Collection. The Australian average is 56 Debtor Days; that's 26 days too many if you provide 30-day credit terms. What is your Debtor Days number? How much cash will come back into your business for every day that you can take off your Debtor Days number?
As an example, if you have sales of $2 million a year and $300k of invoices outstanding your Debtor Days number is 56 days. Reducing that by 10 days to 46 Debtor Days would bring $54k back into your bank account as extra working capital.
What could you do with that cash tor improve or grow your business? Or stay within your banking limits.
Cerebiz has automation tools and processes that provide a systematic way to reduce Debtor Days and speed up your Cash Collection. It also reduces the hours spent each month chasing overdue invoices. And automatically produces a forward cash flow report.
I recommend you look into this aspect of your business, particularly if it is growing.
Terry Rodoni, Consultant. Decades of background in local and national Accounting Practices. On RSM's executive committee for many years.