What does Average Days to Get Paid mean?

This shows how long it takes you to get paid for your sales.

How it's calculated

This metric divides your average accounts receivable balance (that is, the amount that your customers still owe you for past purchases) by your revenue in the selected period. The result is then multiplied by the length of the selected period to translate it into the equivalent number of days.

What's better?

Lower

What it means

This shows how long it takes you to get paid for your sales. Some transactions, such as those in a retail store or restaurant, happen immediately. Others are invoiced, and the customer pays the bill later. A lower value here is better: you want to get paid as soon as possible, rather than having sales lingering as accounts receivable.

If you have a mix of cash sales and sales on credit, this will be a weighted average. Cash sales essentially have a zero-day delay, so they will reduce the average time. Thus a variance here may be due to faster or slower payments on credit sales, or a different mix of cash and credit sales, or both.

 

(Source: LivePlan.com)