Accounts Receivable Turnover Calculator

Accounts receivable turnover measures how many times your business collects its average receivables during a period, showing how efficiently you turn credit sales into cash. This calculator works it out from your net credit sales and your average accounts receivable balance, dividing sales by average receivables to give the turnover ratio. It also converts that ratio into the average collection period in days, by dividing 365 by the turnover, so you can see roughly how long customers take to pay. A higher turnover and a shorter collection period mean you are collecting quickly and keeping less cash tied up in debtors, which strengthens cash flow. A low turnover can point to lenient credit terms, slow follow up, or customers in difficulty. Business owners, credit controllers and accountants across New Zealand use this ratio to monitor collection performance, set credit policy, and forecast cash. For a fair result, use net credit sales rather than total sales, since cash sales never sit in receivables, and use an average of opening and closing receivables when balances swing through the year. Compare your collection period with the credit terms you actually offer, for example 30 days, because a period well above your terms suggests slow payers that need chasing. It also helps to track the trend over several periods rather than reading one figure alone, as a rising collection period is an early warning of cash flow pressure. Read this ratio alongside days payable outstanding and days inventory outstanding to understand your full working capital position and where cash is being locked up in the business.

AR turnover = net credit sales / average receivables. Days = 365 / turnover. Estimate only, not financial or tax advice.