What is a debtor book?
Your debtor book (also called accounts receivable or trade debtors) is the total amount of money owed to your business by customers who have been invoiced but have not yet paid. It is money you have earned but do not yet have. For most service businesses, the debtor book is the largest single asset on the balance sheet and the most common source of cashflow problems.
Debtor days
Debtor days measures how long, on average, it takes your customers to pay. The formula is: total debtors divided by annual revenue, multiplied by 365. If your debtor days figure is 45, it means on average your customers take 45 days to pay after you invoice them. If your payment terms are 30 days, that means most customers are paying late.
Reducing debtor days by even 10 days can release thousands of pounds of cash that was previously tied up waiting. For a business with £500,000 of annual revenue and 50 debtor days, reducing to 40 days frees up roughly £13,700 in cash.
Why it matters
A growing debtor book feels like success because revenue is rising. But if the cash is not arriving, growth is actually making your cashflow worse, not better. Every new sale that is invoiced but not collected increases the gap between what you have earned and what you can spend. This is the most common way profitable businesses run out of cash.
How CFO Pal helps
CFO Pal tracks your debtor book automatically. It shows total debtors, debtor days, and which invoices are overdue. When invoices pass their due date, CFO Pal flags them in your weekly summary and can alert you immediately. You always know who owes you money and how late they are.
Chase faster. Get paid sooner.
CFO Pal tracks every overdue invoice and alerts you automatically. No more money slipping through the cracks.
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