How To Calculate Accounts Receivable Turnover in Deltek Costpoint | Arithmix

Calculating accounts receivable turnover is an essential aspect of managing your business finances. It is a measure of how efficiently your company collects payments from customers. In this article, we will discuss how to calculate accounts receivable turnover and why it is valuable for your business.

What Is Accounts Receivable Turnover?

Accounts receivable turnover is a financial ratio that measures how many times a company collects its average accounts receivable balance during a specific period. It is calculated by dividing the total credit sales by the average accounts receivable balance during the same period.

The formula for accounts receivable turnover is:

Accounts Receivable Turnover = Total Credit Sales / Average Accounts Receivable Balance

This ratio is expressed as a number of times per year. For example, if a company has an accounts receivable turnover ratio of 10, it means that it collects its average accounts receivable balance ten times per year.

When Is It Valuable To Calculate Accounts Receivable Turnover?

Calculating accounts receivable turnover is valuable for businesses of all sizes and industries. It helps you understand how efficiently your company is collecting payments from customers and managing its cash flow. A high accounts receivable turnover ratio indicates that your company is collecting payments quickly, which is a positive sign for your business.

On the other hand, a low accounts receivable turnover ratio indicates that your company is taking longer to collect payments from customers, which can negatively impact your cash flow and profitability. It may also indicate that your company needs to improve its credit policies or collection procedures.

By calculating accounts receivable turnover regularly, you can identify trends and make informed decisions about your business operations. For example, if you notice a decline in your accounts receivable turnover ratio, you may need to adjust your credit policies or collection procedures to improve your cash flow.

In conclusion, calculating accounts receivable turnover is an essential aspect of managing your business finances. It helps you understand how efficiently your company is collecting payments from customers and managing its cash flow. By monitoring this ratio regularly, you can identify trends and make informed decisions about your business operations.

How Do You Calculate Accounts Receivable Turnover in Deltek Costpoint

Deltek Costpoint itself isn’t naturally geared towards letting you calculate complex metrics like Accounts Receivable Turnover. As an alternative, teams typically use products like Arithmix to import data from Deltek Costpoint and build out dashboards.

What is Arithmix?

Arithmix is the next generation spreadsheet - a collaborative, web-based platform for working with numbers that’s powerful yet easy to use. With Arithmix you can import data from systems like Deltek Costpoint, combine it with data from other systems, and create calculations like Accounts Receivable Turnover.

In Arithmix, data is organized into Tables and referenced by name, not by cell location like a spreadsheet, simplifying calculation creation. Data and calculations can be shared with others and re-used like building blocks, vastly streamlining analysis, model building, and reporting in a highly scalable and easy to maintain platform. Data can be edited, categorized (by dimensions) and freely pivoted. Calculations are automatically copied across a dimension - eliminating copy and paste of formulas.

Arithmix is fully collaborative, giving your entire team access to your numbers and the ability to work together seamlessly.

Calculating Accounts Receivable Turnover in Arithmix

Calculating metrics like Accounts Receivable Turnover is simple in Arithmix. Once you've created your free account, you’ll be able to import your Deltek Costpoint data, and use it to create natural language formulas for metrics like Accounts Receivable Turnover.

Arithmix is designed to give you the power to build any calculations you want on top of your Deltek Costpoint data, while also being easy to use and collaborate on. You can share your dashboards with users inside and outside of your organisation, making it easy to empower your whole team.