To calculate your accounts receivable turnover ratio, divide your net sales by your average gross receivables. To calculate your accounts receivable turnover in days, divide your annual net sales by 365, then divide your average gross receivables by the result.What is the formula for calculating accounts receivable?
Accounts receivable turnover is calculated using the following formula: We can obtain the net credit sales figure from the income statement of a company. Average accounts receivable figure may be calculated simply by dividing the sum of beginning and ending accounts receivable by 2.How to calculate your accounts receivable turnover ratio?
How to calculate accounts receivable turnover Run an income statement. Your first step to calculating your accounts receivable turnover is to obtain your net sales for the year. Run a balance sheet. In order to complete the next step, which is calculating your average accounts receivable balance, you will need to run a balance sheet. Calculate your average accounts receivable balance. ... More items...How to minimize accounts receivable?
Ways to Reduce Outstanding Accounts Receivables State Payment Terms Clearly on Invoices. Businesses often have extended lists of terms and conditions, which clients don't really read anyway. Device a Standardized Follow-Up System. A lot of debt collection is based on past precedence. ... Be Proactive. ... Automate the Process. ... Use Professional Help to Collect Outstanding Accounts Receivables. ...