Q. What are Trade receivable days?
Year-end trade receivables/Credit sales (or turnover)] * 365 days
This is average length of time taken by customers to pay. A long average collection means poor credit control and thus cash flow problems may occur. Normal stated credit period is 30 days for most industries. Changes in the ratio may be because of improving or worsening credit control. Major new customer pays slow orfast. Change in credit terms or early settlement discounts are offered to customers for early payment of invoices.