The
Debtor Days KPI is a measurement of the credit activity within the Aftersales Departments. Its purpose is to inform you of the average number
of days that your customers take to pay you.
Example:
A) Aftersales Debtors = R120,624 B) Aftersales Daily Turnover* = R2,805 C) Debtor Days = 43 days (A ÷ B)
Note: In
order to calculate the Aftersales Daily Turnover, you will need to take
the annualised Aftersales Turnover sold on credit and divide that figure
by 365 to arrive at a daily sales turnover.
Example:*
A) Aftersales Turnover On Credit = R1,023,825 B) Days in 1 year = 365 C) Service Daily Credit Turnover = R2,805 (A ÷ B)
Discussion:
In
the first example provided above, the average amount of debt is outstanding for a period of 43 days. In many cases, customer credit agreements are for 30 days and all too often these credit terms are not fully instigated and your money is outstanding for linger periods of time. The question is how much longer?