AR Days Ratio is an important metric used to measure the accounts receivable performance of a business. By tracking how long a business’s customers take on average to pay their bills after they have been issued, it can help businesses better manage their cash flow and plan accordingly in order to make wise investments. It is calculated by taking the total amount of outstanding accounts receivable and dividing it by the total amount of sales made in a given period. For example, if a business has $100,000 in outstanding AR at the end of the month and its sales for that month totaled $500,000, then its AR Days Ratio would be 20 days ($100,000/$500,000). A low AR Days Ratio indicates good credit control management.