The A/R Turnover Formula is an essential metric used to measure a business’s liquidity and efficiency in collecting owed payments. It takes your total A/R (accounts receivable) and divides it by the average of your sales over a period of time, usually a month or quarter. The result gives a ratio of how efficiently you are collecting payments on your due invoices and how much money you’re getting back into the business. Higher numbers mean more effective collections and cash flow, while lower numbers mean you should take a look at your invoicing processes and target the late payers for faster turnaround. Start improving your cash flow today with a better understanding of the A/R Turnover Formula!