Your debtor days begin on the wrong date

Most firms measure collection from the day the invoice leaves: hiding the half of the wait that happens before it, and that they entirely control.

By Steve 4 min read
Abstract bridge artwork for Your debtor days begin on the wrong date

A professional services firm reports debtor days of 38 against 30-day terms. Slightly slow, nothing alarming, and the conversation moves on to which clients need chasing. Meanwhile the same business is drawing on its overdraft in the third week of every month and can’t work out why. The answer is usually that the measurement starts too late. Debtor days (days sales outstanding, however it’s calculated) is anchored to the invoice date. It measures the gap between asking to be paid and being paid. It says nothing about the gap between…

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