Feb 10, 2018
Welcome to Accountants Minute – reducing Debtors’ Days Outstanding as part of an ongoing Debtors’ Review.
Australia has the longest debtors’ days outstanding in the world – 56.4 days according to a UK organisation’s review of over eighty countries last year.
Since that report was released the Australian government has instructed all federal government departments to ensure that small/medium enterprises are paid within twenty days of the invoice date. This will assist those SMEs, who are dealing with the federal government, however many SMEs do not have any transactions at all with the federal government.
I think it is important that every time an accountancy business prepares a set of financial accounts for a client that you calculate debtors’ days outstanding and talk to your client about strategies to reduce debtors’ days outstanding, especially if the calculation result for an individual client is over forty-five days.