The next 3 weeks will be a season of festivities and jolly before returning to work in the new year.
It is also a time that companies with year ends 31.03.2021 need to settle their corporation tax liabilities.
Companies with 31.12.2021 year ends will conserve cash and push creditors a little harder.
These affect key ratios like Debtor Days and Creditors.
Debtor days is the time taken to pay your sales invoices.
Creditor days is the time you take to pay your purchase invoices.
Your ideal is to have the debtor days less than creditor days to boost cash fows.
EXAMPLE ONLY BEFORE
TRADE DEBTORS 63
TRADE CREDITORS 60
EXAMPLE ONLY AFTER
TRADE DEBTORS 35
TRADE CREDTITORS 58
Try these mini calculations out using either your last year statutory accounts or management accounts.
Accounts Receivable (TRADE DEBTORS) X 365
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TOTAL SALES ON CREDIT
Accounts Paybles (TRADE CREDITORS) X 365
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TOTAL COST OF SALES
Do this calculation NOW and call us for a free discussion on how credit control management services can make a real difference.