How long customers take to pay
Work out the average number of days your customers take to pay, compare it with your terms and see what the delay costs.
Task 1The collection period3 questions
When you sell on credit, your money sits with the customer until they pay. The trade receivables collection period is the average number of days that takes.
It is trade receivables ÷ credit sales for the year × 365.
| Item | £ |
|---|---|
| Credit sales for the year | 730,000.00 |
| Trade receivables at the year end | 90,000.00 |
Tarn Valley's invoices ask for payment within 30 days.
Task 2Is it getting better or worse?3 questions
Task 3What slow payers cost2 questions