![]() Working toward and attaining financial security requires businesses to understand their accounts receivable turnover ratio. You can improve your ratio by being more effective in your billing efforts and improving your cash flow.Īccounts Receivable Turnover Ratio Explained.As noted above, business type and industry can impact your AR ratio, so the score viewed on its own may not reflect the quality of your customer base or effectiveness of your retention efforts - it needs to be viewed in context.So it is good practice to compare yourself with others in your industry. Turnover ratio needs to be taken in context with the business type - companies with high AR turnover are a result of the processes in place to secure payment - for example, retail, grocery stores, etc. ![]() In some cases, the business owner may offer terms that are too generous or may be at the mercy of companies that require a longer than 30 day payment cycle.
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