Debtor Days
The average number of days a business waits to be paid by its customers, calculated from the balance sheet trade receivables figure.
Debtor days (also called accounts receivable days or days sales outstanding) measure how long customers take to pay on average. The formula is: (Trade debtors / Revenue) x 365. A business with £300,000 in trade debtors and £2,000,000 annual revenue has debtor days of 54.75.
High debtor days indicate slow customer payment - a common problem in B2B businesses. They increase working capital requirements because the business must fund operations while waiting for payment. Invoice finance directly addresses high debtor days by releasing 70-90% of invoice value within 24-48 hours rather than waiting for customers to pay.
Lenders assess debtor days when evaluating invoice finance facilities. High debtor days relative to agreed payment terms may indicate customer payment problems or disputed invoices. Acceptable debtor days vary by sector - construction and professional services typically have longer cycles than FMCG or retail.
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