Receivables, or sundry debtors in Indian books, are the total of unpaid customer invoices. They are an asset on the balance sheet, but they are cash the business has earned and does not yet have.
A useful number: days of sales outstanding
Days of sales outstanding (DSO) shows how long, on average, customers take to pay:
DSO = receivables ÷ credit sales for the period × days in the periodA distributor with ₹45 lakh owed and ₹1.35 crore of credit sales over the last 90 days has a DSO of 30 days. If its terms are 21 days, customers are paying nine days late on average.
Keeping receivables in check
- Agree credit days and a limit with each customer before the first credit sale.
- Invoice the same day the goods go.
- Record payments against specific bills.
- Review ageing every week and call on the oldest first.
- Hold new orders for parties far over their limit.
A business growing fast often finds its receivables grow faster than its sales, which is how a profitable firm runs short of cash.
On the MatruOS Home screen, money to collect is shown alongside today's sales and money to pay.