Acceptable cash to credit ratio?

[prettypegagirl]

If the ratio is 1.38?

Net receivable sales....annually?

Then you should seriously consider lowering your debtors account or give them incentives to pay you quicker. That basically means that it takes 264 days to turn over your accounts receivables. A good average to start would be between 5 and 8. Your slow paying debtors are going to kill your business.

Do you have an accountant? Speak to him or her to try and find a solution for this.

[Hannes Botha]

The Net receivables sales figure, is that for the year.?

[prettypegagirl]

Yes for the year

[Hannes Botha]

Aaaahh. Might look better then...

[Hannes Botha]

Okay...So revised to use annual account sales devided by average receivables for the period, returns a ratio of 15.2. IS this good or not so good?

You see even looking at the averages I noticed our debtors book at the beginning of the period was on about R590k and at the end of the period on R817k.

[prettypegagirl]

Much better! That means it's doing okay and debtors won't kill your business. It usually takes you 24 days to get the money in, which is great for your line of business.

[Hannes Botha]

Well that's a relief. Thanks prettypegagirl!

[prettypegagirl]

My pleasure.