Your Results
Accounts Receivable Days
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The average number of days it takes for your customers to pay their invoices.
Cash Tied Up in Receivables
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The estimated amount of cash currently unavailable due to outstanding invoices.
Collection Efficiency Ratio
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Measures how effectively your business collects its receivables compared to your payment terms.
How This Calculator Works
The calculator determines your accounts receivable days by dividing your average accounts receivable by your total credit sales, then multiplying by the number of days in the period. This shows the average time it takes to collect payments.
When to Use This Tool
A snack brand is evaluating whether to continue selling to a regional grocery chain known for slow payments.
The tool reveals the grocery chain's payment cycle is 75 days, significantly longer than the brand's 45-day terms, impacting working capital.
A beverage company wants to assess the financial health of its distributor network.
By calculating AR days for each distributor, the company identifies which partners consistently pay late, indicating potential cash flow issues for both parties.
A frozen food startup needs to forecast its cash availability for an upcoming ingredient purchase.
Understanding the current AR days helps the startup accurately predict when outstanding invoices will convert to cash, allowing for better purchasing decisions.
Common Questions
Why is tracking Accounts Receivable Days important for a CPG brand?
It directly impacts your cash flow. Slow collections mean less cash available for purchasing raw materials, production, marketing, and paying your own suppliers, potentially hindering growth.
What is considered a good Accounts Receivable Days number for CPG?
A good number is typically close to or below your average payment terms (e.g., 30-45 days). It varies by industry and customer type, but lower is generally better as it means faster cash conversion.
How can a CPG brand reduce its Accounts Receivable Days?
Strategies include offering early payment discounts, enforcing clear payment terms, sending timely invoices, following up promptly on overdue accounts, and improving credit checks for new customers.
Does this calculator account for different payment terms with various customers?
This calculator uses an average. For a precise view of individual customer performance, you would need to track each customer's payment history against their specific terms.
Improve CPG Cash Flow Today.
Guidance provides real-time insights into your CPG operations, helping you manage finances and optimize working capital. Make data-driven decisions for better profitability.
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