It doesn’t seem much at the time. Your Accounts Receivables Days outstanding has just slipped from 45 days on average to 50 days. So what? You lose 5 days.
Say you ship $36.5m of product in a year. Call it $100,000 per day of sales invoices (for the lawyers reading this, all I did was take $36.5m divided by 365 days).
Say your cost of borrowing is 8%. Those 5 days lost just cost you $40,000 in annual real costs. Certainly enough to get a decent junior credit controller!
