Accounts Receivable Turnover is a metric used to measure the rate at which customers are paying their bills. It’s calculated by dividing annual credit sales by average accounts receivable. This ratio can be used to assess a company’s effectiveness in collecting payments on time and generating cash flow. High turnover reflects a short collection period and indicates that customers are generally quick to pay, while low turnover may suggest a longer wait period or even potential issues with collectability. In either case, tracking turnover helps businesses manage their financial health and ensure efficient use of credit.