Your Business Liquidityĭepending on how long you have been in business and how solid your financial foundation is, you might be in a position where you are willing to let your clients go a little longer than the average business in your industry before settling their account balances. One of the most significant factors in determining how much of your accounts receivable should be permitted to fall into past due territory depends on what type of industry you find yourself in.įor example, it would be completely unacceptable for any significant percentage of a restaurant’s customers to wait 30 or 45 days to pay for services rendered, but this is commonplace in many other service industries. In order to figure out the right target percentage for your accounts receivable, let’s take a look at six of the most important factors that can influence how your business performs compared the industry averages. As a general rule, the average business for multiple industries across the country is shooting for a past due receivables percentage in the neighborhood of 10-15%, but depending on your specific circumstances, your ideal number could end up being much higher or lower than that. The acceptable percentages of accounts receivable that are past due can vary tremendously depending on a wide range of factors. One of the biggest cash flow drains that can ruin a business is when those payments start coming in later than expected. Every business that extends credit to its customers has to struggle with getting those customers to make their payments according to the agreed upon time frame.
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |