Receivables analysis works with two different types of information: On the one hand, you can look at a customer’s outstanding payments, and on the other, the customer’s payment behavior. With information about their outstanding payments, the accounts receivable department can provide information on the company’s liquidity. If management knows when to expect which payments, it can get information about the financial leeway over time and can adjust its planning accordingly.
In addition, the accounts receivable department also keeps an eye on the customers themselves, as mentioned above. Information about individual debtors’ payment behavior, but also an analysis of all customers’ general payment behavior provides early information about potential risks for the company and possibly within the entire industry. There are also special key ratios for this, like the distribution of sales per customer and per item, the average payment days for accounts receivable, the extent of cash discount utilization, or trends on days in arrears.