What is Average Days Delinquent ?
Average Days Delinquent is a financial metric commonly used in credit management and accounts receivable analysis which calculates the number of days by which each invoice has passed its due date of payment. For example, if an invoice with a due date of January 1st is paid on January 10th, it is 9 days overdue. A higher average days delinquent suggests slower payment behavior among customers, which can have implications for cash flow management and liquidity. Monitoring the average days delinquent helps businesses assess the effectiveness of their credit policies and terms. If the average days delinquent exceeds the credit terms offered to customers, it may indicate a need to review and adjust credit policies to mitigate the risk of late payments. In summary, average days delinquent is a valuable metric for evaluating accounts receivable performance, credit risk, and cash flow management. By monitoring and managing this metric effectively, businesses can improve collections, and reduce financial risks.
How to Calculate Average Days Delinquent?
Average Days Delinquent calculator uses Average Days Delinquent = Days Sales Outstanding-Best Possible Days Sales Outstanding to calculate the Average Days Delinquent, Average Days Delinquent indicates an average number of days, past their due dates invoices remain unpaid. Average Days Delinquent is denoted by ADD symbol.
How to calculate Average Days Delinquent using this online calculator? To use this online calculator for Average Days Delinquent, enter Days Sales Outstanding (DSO) & Best Possible Days Sales Outstanding (BPDSO) and hit the calculate button. Here is how the Average Days Delinquent calculation can be explained with given input values -> 4 = 7-3.