Receivables Turnover

What is Receivables Turnover?

Receivables Turnover measures how efficiently you collect money owed by customers. A higher ratio means faster collection, which improves cash flow and reduces the risk of bad debt.

Why Receivables Turnover Matters

For SaaS companies with enterprise contracts that pay on net-30 or net-60 terms, slow collections can strangle cash flow even with strong bookings. A declining receivables turnover ratio signals collection problems that will eventually hit your bank account.

For ecommerce founders selling B2B or wholesale, this metric reveals whether your payment terms are appropriate and whether customers actually pay on time.

Relationship to DSO

Receivables Turnover and Days Sales Outstanding (DSO) are inversely related. Higher turnover means lower DSO. Both measure the same thing from different angles.

Your SaaS company has:

• Annual Credit Sales: $2,400,000
• Average Accounts Receivable: $200,000

Receivables Turnover = $2,400,000 ÷ $200,000 = 12

You collect your receivables 12 times per year, or roughly every 30 days on average. That is solid performance for enterprise SaaS with net-30 terms.