Cash Flow Tool 25

Net terms.
What it actually costs to wait.

Offering net 30, 60, or 90 terms to retailers isn't free. Model the true carrying cost of outstanding receivables, compare early payment incentives, and see your effective AR cost.

1Terms Structure

Annual WS Revenue ($)

% Accounts on Net Terms

Avg Net Terms (days)

2Carrying Cost

Cost of Capital (% p.a.)

Your borrowing or opportunity rate

Bad Debt Rate (%)

Historical write-off %

AR Admin Cost (% of revenue)

Collections, billing, reconciliation

3Early Pay Discount

EPD Offered (%)

Discount for early payment

Payment Accelerated To (days)

% Accounts Taking EPD

4Current AR Snapshot

Current Outstanding AR ($)

Carrying Cost on Current AR (monthly)

True Annual Net Terms Cost-

Annual
Terms Cost

Avg AR
Outstanding

Effective
Terms Rate %

Annual Cost Breakdown

Revenue on net terms-

Avg outstanding AR-

Capital carrying cost-

Bad debt provision-

AR admin cost-

Total Annual Terms Cost-

Early Pay Discount Analysis

EPD cost (annualized %)-

Days freed by EPD takers-

Net benefit of EPD program-

Net terms.What it actually costs to wait.

Net terms.
What it actually costs to wait.