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Good-day,
I have trade receivables at 260 Revenue 1600 and obviously 365
260/1600*365= 59.31 days payment, Below comes my question if the current system customers are taking 59, to pay their debt, If we improve system and reduce receivables payment days to 30 days, I would like help in calculating the days cash tight up?Or other words how find out the tight up cash since agreed with customer is 30 days,But customers are taking 59 days to make payment?
What you agree with your customers does not really matter: what’s important is how long they actually take to pay.
If they comply with your wish to reduce payment to 30 days then the amount of receivables should be:
30 x 1,600/365 = 131 ie about half what it was when they took 59 days.
Thank you for your response,But i am still not matching my answer with yours.
Trade Receivables as per question 260,000,00 Dollars
Revenue 1,600,000,00
Days 365260/1600*365=59.31 days i am fine on this
My question if i reduce my limit of tied up cash to 30 days what would be workings or answers in tied funds?The answers as per question says reducing agreed 30 days would be realise about $128500 or 40days would realise $84500 how did they perform workings do get this numbers? Thanks in advance
I guess i got it whereby on the tied up cash as follows;
59.31 Days – 30 to comply to pay = 29,31days*1600/365 = $128,482
Thank you very much on opening my mind.
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