Understanding and Managing Debtor Days

What are Debtor Days?

Debtor Days (also known as Days Sales Outstanding or DSO) is a key financial metric that measures how long, on average, it takes your customers to pay you after you’ve issued an invoice.

Debtor Days = (Trade Debtors ÷ Sales) × Number of Days in Period

For example, if you have $30,000 in outstanding receivables and your monthly sales are $60,000, your Debtor Days for that month would be 15 days.

Why are Debtor Days Important?

Debtor Days directly affect your cash flow — the longer it takes to collect from customers, the more strain it puts on your ability to operate smoothly.

Key reasons Debtor Days matter:

• Cash Flow Management: High debtor days mean slower cash coming in, which can lead to cash shortages.

• Customer Health Check: Increases may signal that certain customers are struggling to pay or require tighter credit control.

• Working Capital Efficiency: The faster you collect, the more capital you can reinvest in growth or operations.

• Credit Control Insight: Helps assess whether payment terms and collection processes are effective.
  

How Debtor Days Helps Your Business

Tracking and reducing debtor days allows you to:

• Maintain liquidity and avoid relying on debt to cover short-term expenses.

• Improve customer payment behaviour by identifying repeat late payers.

• Optimise your invoicing and collections process.

• Free up cash for strategic use (e.g., hiring, purchasing inventory, expansion).
  

How Debtor Days is Calculated in Acanthis

For the General Industry:

• Debtor Days is calculated automatically based on:

  • Your trade debtor balances (from your accounting platform)

  • Your sales over the selected period 

Important:
Ensure that your accounting integration (e.g., Xero or QuickBooks) is connected and up to date. This ensures your receivables and revenue data are accurate for calculation.

Setting Your Debtor Days Target in Acanthis

You can configure your target Debtor Days each month to reflect your business goals or seasonal expectations.

1. Go to Settings:
   In Acanthis, click Settings in the left-hand navigation menu.

2. Select Organisation Configs:
   Click on Organisation Configs, then select Monthly Configs.

3. Choose the Month You Want to Update:
   Use the date selector to pick the relevant month.

4. Set Your Debtor Days Target:
   Enter your target value for that month. This will be used as the benchmark against your actual performance.

5. Click Save to save the update.
   

6. Click Publish Configs to publish and recalculate your metrics

Tip:
A good Debtor Days target depends on your business model, but most aim for 15–30 days. If you’re consistently over 45 days, review your payment terms or use automation to chase invoices.