Calculate Receivables Turnover is a metric used to measure the efficiency of a business in collecting its outstanding customer accounts. It indicates the average number of times per year that the total amount of accounts receivable is collected through sales. The formula to calculate it is: Net Credit Sales / Average Accounts Receivable. A high turnover ratio indicates that the company has effective credit management, while a low ratio might suggest inefficient and loose credit policies, which may lead to cash flow problems. Understanding your accounts receivable’s turnover ratio allows you to adjust your collection strategies as needed and keep your customers happy.