The Accounts Receivable Collection Period measures the average amount of time it takes for a company to collect payments from its credit customers. This is a crucial metric for analyzing a company's efficiency in managing its receivables and cash flow.
Age analysis is a crucial component of the credit control system, enabling businesses to categorize and evaluate outstanding debtor accounts based on the length of time they have been overdue, ensuring timely follow-ups and effective credit management.
A credit limit refers to the maximum balance that a credit card issuer allows a customer to borrow on their credit card. It is a fundamental aspect of credit management and determines the extent of a cardholder's purchasing power.
Credit risk refers to the potential that a borrower or counterparty will fail to meet its obligations in accordance with agreed terms. This concept is crucial for lenders and investors as it impacts the stability and profitability of financial institutions and markets.
Days' Sales in Receivables is a financial metric that indicates the average number of days it takes a company to collect payment after a sale has been made. This ratio helps businesses understand the efficiency of their credit and collection processes.
Days' Sales Outstanding (DSO) is a financial metric that indicates the average number of days it takes for a company to collect payment after a sale has been made.
Debtor Collection Period, also known as Average Collection Period, is the average time it takes for a business to collect the money owed to it by its trade debtors. This period is critical for managing cash flow effectively.
A Receivables Aging Schedule is an accounting table that shows the amounts due from customers broken down by their aging period. This tool helps businesses monitor outstanding invoices and evaluate the effectiveness of their credit and collections processes.
