What are debtor days?
Debtor days measure the average time a business takes to collect payment from customers who buy on credit.
The longer customers take to pay, the longer your money remains tied up outside the business.
A company can have strong sales but still experience cash-flow pressure if customers take too long to settle invoices.
How to calculate debtor days
A simplified calculation is:
Debtor days = (Average trade receivables ÷ Credit sales) × Number of days
Example:
A business has average outstanding customer invoices of R150,000 and monthly credit sales of R300,000.
Using a 30-day period:
(R150,000 ÷ R300,000) × 30 = 15 days
The business has approximately 15 debtor days using this simplified monthly calculation.
For a more reliable annual measure, use average receivables and annual credit sales over the same accounting period. Be consistent about whether figures include VAT.
Tactic 1: Request deposits before starting work
Deposits reduce the amount of money your business must contribute before delivering a product or service.
This is especially useful for:
- Custom furniture.
- Manufacturing.
- Construction.
- Events and catering.
- Printing and branding.
- Special-order stock.
- Professional projects with substantial upfront costs.
For example, a furniture manufacturer receives an order worth R20,000.
It requests a 50% deposit before purchasing materials.
| Description | Amount |
|---|---|
| Total order value | R20,000 |
| Customer deposit at 50% | R10,000 |
| Remaining balance | R10,000 |
The business receives R10,000 to support production before the final delivery.
The deposit policy should be clearly communicated and included in the customer’s quotation or agreement.
Tactic 2: Invoice immediately
Do not wait until the end of the month to invoice work that was completed earlier.
If a business delivers goods on the 5th but only issues the invoice on the 25th, it has delayed the payment process by 20 days.
Issue invoices promptly and make sure the customer has all the supporting documents required for payment.
Tactic 3: Create a payment escalation ladder
Use the following system:
| Timing | Action |
|---|---|
| Day 0 | Issue invoice and confirm receipt |
| Day 3 | Confirm that the invoice is correct |
| Day 7 | Send a friendly payment reminder |
| Day 14 | Contact the responsible accounts person |
| Day 21 | Escalate to management if unresolved |
| Day 30+ | Review credit exposure and consider formal collection steps |
Adapt the schedule to your agreed payment terms. A customer with 30-day terms should not be treated as overdue on Day 7.
Tactic 4: Use customer credit limits
Set limits based on the customer’s payment history and the amount of risk your business can afford.
For example, a customer who consistently pays on time may qualify for a higher credit limit, while a customer with repeated overdue accounts may need to pay before receiving further goods.
Review credit limits regularly.
Tactic 5: Measure your collection performance
Track these figures every month:
- Total outstanding invoices.
- Total overdue invoices.
- Average debtor days.
- Amount overdue by 30 days.
- Amount overdue by 60 days.
- Amount overdue by 90 days.
- Payments collected during the month.
- Disputed invoices.
Copy-and-paste debtor tracking template
| Customer | Invoice number | Invoice date | Due date | Invoice amount | Amount paid | Outstanding | Days overdue |
|---|---|---|---|---|---|---|---|
| Customer A | INV001 | 01/11/26 | 30/11/26 | R10,000 | R0 | R10,000 | 0 |
| Customer B | INV002 | 05/10/26 | 04/11/26 | R15,000 | R5,000 | R10,000 | 0 |
| Customer C | INV003 | 01/09/26 | 01/10/26 | R20,000 | R0 | R20,000 | 32 |
Illustrative records only. Days overdue should be calculated using the actual reporting date and contractual due date.
Sample payment reminder
Subject: Payment Reminder – Invoice INV001
Dear [Customer Name],
We hope you are well.
We are following up on invoice INV001 for R10,000, which was due on [date].
Please confirm whether payment has been scheduled. If payment has already been made, kindly share the proof of payment so that we can update our records.
If there is any query preventing payment, please let us know so that we can resolve it.
Thank you for your assistance.
Kind regards,
[Business Name]
Frequently asked questions
There is no universal target. Compare your actual collection period with your agreed customer terms, industry conditions and cash-flow requirements.
Not automatically. First investigate the cause, communicate with the customer and assess the financial exposure. Repeated late payment may justify revised terms or a decision not to extend further credit.
You can establish a deposit policy appropriate to your business and customer agreements. Communicate the terms before accepting the order.
Start by invoicing immediately, confirming invoice receipt and following up consistently.
What is a good debtor-days target?
Should I stop working with customers who pay late?
Can I charge a deposit on every order?
What is the fastest way to improve collections?
Your next action
Identify your five largest outstanding invoices. Contact each customer, confirm the expected payment date and record the outcome in your debtor tracking sheet.