Page 2 of 3 FirstFirst 123 LastLast
Results 11 to 20 of 23

Thread: Acceptable cash to credit ratio?

  1. #11
    Full Member
    Join Date
    Aug 2014
    Location
    Cape Town
    Posts
    81
    Thanks
    0
    Thanked 3 Times in 3 Posts
    Quote Originally Posted by prettypegagirl View Post
    To better manage the debtors offer them discount for paying earlier, the moment a big company gets discount they will pay earlier
    The big companies aren't a problem, they pay on time. It's the smaller guys and government...

  2. #12
    Full Member
    Join Date
    Jun 2012
    Location
    Eastern Cape
    Posts
    41
    Thanks
    1
    Thanked 3 Times in 3 Posts
    Government = Nothing you can really do about it, They have 30, 60 or 90 days after invoice received date to pay depending on contract

    Small guys - Do not offer them Credit, rather accept something like RCS Cards, at least you will get the money quickly and the risk is with RCS not you. Might be worth it to look into some type of Credit Risk Insurance

  3. #13
    Full Member
    Join Date
    Aug 2014
    Location
    Cape Town
    Posts
    81
    Thanks
    0
    Thanked 3 Times in 3 Posts
    Okay so...Receivables turnover ratio=Net receivable sales (Sales on account)/Average net receivables.

    In this ratio what is average net receivables?
    Attached Thumbnails Attached Thumbnails Click image for larger version. 

Name:	a2decae6489f9e3a20f1429e1aa14def.png 
Views:	121 
Size:	2.2 KB 
ID:	5374  

  4. #14
    Full Member
    Join Date
    Jun 2012
    Location
    Eastern Cape
    Posts
    41
    Thanks
    1
    Thanked 3 Times in 3 Posts
    Average receivables is calculated by adding the beginning and ending receivables for the year and dividing by two

  5. #15
    Full Member
    Join Date
    Aug 2014
    Location
    Cape Town
    Posts
    81
    Thanks
    0
    Thanked 3 Times in 3 Posts
    If the ratio is 1.38?

    Net receivable sales....anually?

  6. #16
    Full Member
    Join Date
    Jun 2012
    Location
    Eastern Cape
    Posts
    41
    Thanks
    1
    Thanked 3 Times in 3 Posts
    Quote Originally Posted by Hannes Botha View Post
    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.

  7. #17
    Full Member
    Join Date
    Aug 2014
    Location
    Cape Town
    Posts
    81
    Thanks
    0
    Thanked 3 Times in 3 Posts
    The Net receivables sales figure, is that for the year.?

  8. #18
    Full Member
    Join Date
    Jun 2012
    Location
    Eastern Cape
    Posts
    41
    Thanks
    1
    Thanked 3 Times in 3 Posts
    Yes for the year

  9. #19
    Full Member
    Join Date
    Aug 2014
    Location
    Cape Town
    Posts
    81
    Thanks
    0
    Thanked 3 Times in 3 Posts
    Aaaahh. Might look better then...

  10. #20
    Full Member
    Join Date
    Aug 2014
    Location
    Cape Town
    Posts
    81
    Thanks
    0
    Thanked 3 Times in 3 Posts
    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.

Page 2 of 3 FirstFirst 123 LastLast

Similar Threads

  1. Acceptable behaviour to customer -
    By sterne.law@gmail.com in forum General Business Forum
    Replies: 36
    Last Post: 02-Oct-20, 10:09 AM
  2. Replies: 2
    Last Post: 11-Jan-14, 02:37 PM
  3. Which one will be acceptable to you, Online Voucher Deal or Product Deal?
    By robinsonwang in forum Business Online Forum
    Replies: 5
    Last Post: 27-Mar-12, 01:59 PM
  4. Replies: 13
    Last Post: 19-Feb-11, 10:08 AM

Did you like this article? Share it with your favourite social network.

Did you like this article? Share it with your favourite social network.

Posting Permissions

  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts
  •