How To Calculate Accounts Receivable Turnover in Sage X3 | Arithmix

Calculating accounts receivable turnover is an important aspect of managing your business's finances. It helps you understand how efficiently your company is collecting payments from customers and how quickly you can convert outstanding invoices into cash. While Sage X3 is a great tool for managing your finances, you can calculate accounts receivable turnover using any accounting software or even a simple spreadsheet.

What Is Accounts Receivable Turnover?

Accounts receivable turnover is a financial metric that measures how many times a company collects its average accounts receivable balance during a given period. It is calculated by dividing the total credit sales by the average accounts receivable balance. The resulting number represents the number of times a company collects its outstanding invoices during a specific period, usually a year.

For example, if your company had $1,000,000 in credit sales and an average accounts receivable balance of $100,000, your accounts receivable turnover would be 10. This means that your company collects its outstanding invoices ten times a year on average.

When Is It Valuable To Calculate Accounts Receivable Turnover?

Calculating accounts receivable turnover is valuable for several reasons. Firstly, it helps you understand how efficiently your company is collecting payments from customers. A high accounts receivable turnover indicates that your company is collecting payments quickly, while a low accounts receivable turnover indicates that your company is struggling to collect payments in a timely manner.

Secondly, accounts receivable turnover can help you identify potential cash flow problems. If your accounts receivable turnover is decreasing over time, it may indicate that your company is struggling to collect payments, which can lead to cash flow problems. On the other hand, if your accounts receivable turnover is increasing, it may indicate that your company is improving its collection processes and managing its cash flow more effectively.

Finally, accounts receivable turnover can help you benchmark your company's performance against industry standards. By comparing your accounts receivable turnover to other companies in your industry, you can identify areas where your company is performing well and areas where it needs to improve.

In conclusion, calculating accounts receivable turnover is an important aspect of managing your business's finances. It helps you understand how efficiently your company is collecting payments from customers, identify potential cash flow problems, and benchmark your company's performance against industry standards. While Sage X3 is a great tool for managing your finances, you can calculate accounts receivable turnover using any accounting software or even a simple spreadsheet.

How Do You Calculate Accounts Receivable Turnover in Sage X3

Sage X3 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 Sage X3 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 Sage X3, 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 Sage X3 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 Sage X3 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.