How Much Cash Is Sitting In Your Debtors?
Debtor days is the average time between invoicing and being paid. Every day of it is cash the business has earned but cannot use. Enter annual revenue, your current debtor days and the target you want to reach, and the calculator shows the receivables balance at each, the cash released by the change and what that cash costs to finance each year.
Works for a single business or for a firm advising clients. Use invoiced revenue on the same basis as the debtors ledger, including GST if receivables include it.
Debtor Days Cash Flow Calculator
Use revenue on the same GST basis as your receivables balance.
Credit sales for the year. Cash sales paid at the time do not create debtors.
Receivables divided by annual revenue, times 365.
Your terms plus a few days for customer processing.
Overdraft or loan rate, or the return the cash would earn elsewhere.
A one-off release. Negative means the target is longer than today and would tie up more cash.
An estimate from the figures you entered, not financial advice. Assumes revenue arrives evenly through the year. Seasonal businesses will see the ledger balance move above and below the estimate. Enter aggregate figures only.
Reading the Result
Three numbers matter: the receivables balance implied by your current debtor days, the balance at your target, and the difference, which is cash released once and a financing cost avoided every year.
Receivables is revenue per day times debtor days
Annual revenue divided by 365 is what the business invoices on an average day. Multiplied by debtor days, it is the money outstanding at any moment. This is a steady-state estimate, so it will not match the ledger to the dollar on a seasonal business, but the direction and the scale are right.
Cash released is a one-off, financing saved is annual
Reducing debtor days from the current figure to the target shrinks the receivables balance. That reduction arrives once, as cash in the bank, and stays there while the target holds. The financing cost avoided repeats every year, because the business no longer funds that balance from an overdraft, a loan or the owner’s own money.
The target should be your terms plus a small lag
If your terms are 14 days, a target of 20 to 25 days is achievable with consistent invoicing and follow-up. A target well below your stated terms is not realistic without changing the terms. A negative cash released figure means the target you entered is longer than today and would tie up more cash, not less.
How the Numbers Are Built
Four steps using your revenue figure, your current debtor days and a target. No benchmarks, no industry averages.
Revenue per day
Annual revenue divided by 365.
Receivables now and at target
Revenue per day multiplied by current debtor days, and again by target debtor days.
Cash released
Receivables now less receivables at target. Negative if the target is longer than today.
Annual financing cost saved
Cash released multiplied by your cost of capital. Use the overdraft or loan rate if the business borrows, or the return you would otherwise earn on the money.
What Moves Debtor Days
Four things that shorten the gap between invoice and payment, in the order most businesses should attempt them.
Invoice on time, every time
Debtor days start counting from the invoice date, but the customer’s clock starts when they receive the invoice. An invoice raised a week after the job adds a week to the real cycle. Invoicing the day the work is done, with the right purchase order reference and the right contact, removes the delay before the customer has even seen it.
- Raise the invoice the day the work or delivery is complete
- Include the purchase order number and the contact who approves payment
- Send from the ledger so the payment link and the record match
- Check the invoice email address is the accounts payable inbox, not the buyer
Follow up on a schedule, not when someone remembers
Most late payment is not refusal, it is an invoice nobody actioned. A reminder before the due date, one on the due date and one shortly after collects a large share without a phone call. AI drafts the reminders from the ledger, a person approves the sequence, and the calls are reserved for the accounts that are genuinely overdue.
- Reminders drafted from the ledger with the invoice attached
- Sequence approved once, then runs for every invoice
- Escalation to a person at a set number of days overdue
- Disputed invoices are pulled out of the sequence, not chased harder
Make paying easy
A payment link on the invoice, card and direct debit options, and correct bank details reduce the friction on the customer side. Every step a customer has to take between reading the invoice and paying it adds days. Businesses that add a pay-now option often see the change in the debtor days figure within a quarter.
- Payment link on every invoice and every reminder
- Direct debit for recurring customers where they agree
- Bank details verified and consistent across all documents
- Remittance matched to the invoice automatically when it arrives
Watch the number monthly
Debtor days is easy to calculate from the ledger and easy to ignore. Businesses that put it on the monthly report, alongside the aged receivables, find the trend before it becomes a cash problem. A rising figure with stable sales is an early warning that collection has slipped or that a large customer is stretching terms.
- Calculate it monthly from the same ledger figures
- Report it next to the aged receivables balance
- Investigate any month it rises with no change in sales
- Set the target in the report and track the gap to it
Next Steps
AI Debtor Chasing
How reminder sequences are drafted from the ledger and approved by a person.
See how it works →AI Cash Flow Forecasting
Put the released cash into a forward view of the bank balance.
Read about forecasting →AI Financial Reporting
Get debtor days onto the monthly report without building it by hand.
Read about reporting →Frequently Asked Questions
Take the trade receivables balance from the balance sheet, divide it by the revenue for the period, and multiply by the number of days in that period. For a year, that is receivables divided by annual revenue, times 365. Use the same GST basis for both figures. Most cloud ledgers show the receivables balance and the period revenue on their standard reports, so the calculation takes a minute.
Your payment terms plus a small lag for processing on the customer side. If terms are 30 days, somewhere between 35 and 40 is a realistic target for a business with consistent invoicing and follow-up. Entering a target below your terms assumes customers pay early, which few do without an incentive. If you want to model shorter terms, change the terms first and then set a target that reflects them.
If the business runs an overdraft or a loan, use that interest rate, because released cash reduces the balance you pay interest on. If the business is cash positive, use the return you would get from the money elsewhere, whether that is a deposit rate or the return on investing in the business. The figure is a rate you choose; the calculator does not assume one.
The calculator assumes revenue arrives evenly through the year. A business with a strong season will have a receivables balance above the estimate after the busy period and below it after the quiet one. The annual estimate is still the right basis for the cash released figure, because the target reduces the balance in every month, busy or quiet. If you want a point-in-time figure, use the ledger balance directly.
It includes whatever you include. Receivables on the balance sheet usually include GST because customers owe the invoice total. If you enter revenue including GST, the receivables and cash released figures will be on the same basis. If you enter revenue excluding GST, the figures will be understated by the GST share. Either is fine as long as you are consistent and read the result accordingly.
No. Everything is calculated in your browser and nothing is transmitted. Your slider positions are saved in your own browser storage so they are there when you return, and the reset button clears them. Only aggregate figures are requested. No customer names, invoice details or ledger exports should be entered into this or any similar web tool.
Want to Reach That Target Without More Phone Calls?
Tell us your current debtor days and the ledger you use. We will show you what a drafted-and-approved reminder sequence looks like for your invoices and what it costs against the cash you just calculated.