Slow accounts receivable turnover is a common cash-flow challenge for businesses, rarely solved by traditional bank financing. The financing gap between waiting for customers to pay and paying your suppliers on time, can be difficult to solve. Your business is profitable on paper, but you’re juggling customer and supplier relationships, with neither entirely satisfied. Flexible financing from Accord can help you bridge the liquidity gap and keep your business growing.
Let Accord bridge the financing gap from slow receivables turnover
Our Slow Receivables Turnover Solutions
Accord’s simple solutions can relieve the pressure of slow receivables turnover:
Accounts Receivable Financing
Accounts receivable financing through asset-based lending is a viable alternative to bank financing for companies looking for maximum flexibility. An Accounts receivable facility can unlock the value of the accounts receivable you have earned but have not yet collected.
Learn MoreFactoring
Boost your working capital and unlock the value of your accounts receivable by factoring with Accord. We offer flexible financing solutions from $100,000 to $20 million, improving your company’s cash flow.
Learn MoreChallenges of Slow Accounts Receivable Turnover
If you’ve shipped and your customer doesn’t pay, or consistently pays late, what do you do? Pressuring them to pay on time is a problem, especially if you want to retain the customer relationship. And the real problem behind this predicament is your cash flow.
Selling on terms, and carrying past-due customers, can put a strain on financing. The gap between paying for your supplies and collecting from your customers is an age-old problem. Accounts receivable financing, factoring, and even inventory finance, can ease the pressure by quickly turning working capital assets into cash. These flexible solutions speed up the cash flow cycle, and equally important, preserve your valuable business relationships.
Frequently Asked Questions
Slow receivables turnover is when your accounts receivable are extending beyond the standard or agreed upon terms.
If your company is experiencing slow receivables turnover, you should consider utilizing Accord’s experts who can provide accounts receivable management to streamline your entire A/R process, or improve your firm’s liquidity with accounts receivable financing.
Your accounts receivable turnover ratio is calculated by using the following formula:
Accounts Receivable Turnover Rate=Net Credit Sales/Average Net Accounts Receivable
The ratio is calculated by your net credit sales for a given period divided by average accounts receivable for that same period. This will tell you whether your accounts receivable are being paid within the agreed term or you are experiencing slow receivables turnover.
A high accounts receivable turnover ratio indicates that your customers are paying in a timely manner and as a result you are limiting the amount of capital tied up in your accounts receivable.
A low ratio, on the other hand, indicates that you are experiencing slow receivables turnover and that you should take measures to avoid this turning into bad debt.
Inventory turnover is the rate at which your company is selling and replacing inventory. Accounts receivable turnover is the rate at which your company is collecting on sales where you have extended credit to your customers.
One of the best ways to improve your accounts receivable turnover is to outsource your accounts receivable management and/or receive A/R financing.
Accord has decades of experience improving slow receivables turnover and providing accounts receivable financing to ensure your success. Call us now to see how you can improve your slow receivables turnover at +1-800-967-0015.
A bad debt loss occurs when you are unable to collect an outstanding invoice or account receivable from your customer.
To calculate bad debt loss percentage or ratio, divide the amount of your bad debts by the total sales for a specific period of time, and then multiply by 100.
Bad debt loss is uncollected debt owed to your company.
Capital loss refers to an investment your company made that depreciated in value.