Receivables Turnover is a good way to gauge the effectiveness of your company's payments terms. If this number is low compared to the industry average, it may mean your
payments terms are too lenient or that you could improve your collections.By tracking this figure monthly or quarterly you can uncover any changes in collection trends. Use this
ratio in conjuction with average collections period.
You can monitor the perfomance of your accounts receivable by doing a periodic ratio analysis. The two main ratios for evaluting how well you manage your receivables are
the receivables turnover ratio and average number of days receivables outstanding(Days Receivable).
