kredcor
Credit Calculator
Debtor Control, Recovery Readiness & ROI Calculator
This live version helps credit managers, debtors clerks, CFOs, and SME owners quickly see where cash may be getting trapped, where debtor control may be slipping, and which risk signals may already justify faster, firmer action.
Tutorial: below the calculator you will find a comprehensive tutorial on how to use the Credit Calculator. There is also a Terminology section and example cases.
- See where overdue debt may already be restricting cash flow.
- Understand whether routine collections are still enough or whether escalation may now be appropriate.
- Prepare a cleaner, decision-ready summary before speaking to Kredcor.
Support options
These options help visitors quickly identify the kind of support that may best fit their current debtor-control pressure.
Confidential callback
A quick confidential discussion to understand the pressure points, the immediate risk, and the most sensible next step.
- Best for urgent uncertainty
- Useful for owners and CFOs
- Helps frame the problem quickly
Debtor book assessment
A broader review of overdue structure, disputes, promise discipline, and the operational gaps that may be weakening debtor control.
- Best for credit managers
- Useful where drift is increasing
- Supports internal improvement planning
Pre-collection / handover prep
When severe arrears are building, this option helps frame a cleaner, faster, and more defensible escalation path.
- Best for heavier overdue books
- Useful when 90+ pressure is rising
- Supports escalation readiness
1) Portfolio inputs
Use month-end or quarter-end numbers. Keep them practical rather than theoretical.
2) Behaviour, cost, and file strength
These turn the age analysis into management-level guidance.
3) Documentation readiness
Tick what is available. This affects readiness, leverage, and escalation quality.
Average collection speed in days.
Waiting...Average days delinquent beyond agreed terms.
Waiting...DSO if only current balances remained.
Waiting...Collection effectiveness for the period.
Waiting...Share of the book already overdue.
Waiting...Severe age pressure in the book.
Waiting...Share of tracked promises that appear to have held.
Waiting...Combined top-5 debtors as a share of the book.
Waiting...Practical recoverability estimate.
Waiting...Strength of file preparation.
Waiting...How ready the file appears for firmer action.
Waiting...Estimated recoverable value after fee and reserve.
Waiting...Debtor control score
A plain-language score showing how much real control the debtor book appears to be under.
Recommended path
A practical commercial view of what the current numbers appear to justify.
Executive summary
Executive spotlight
A sharper management lens for owners, CFOs, and credit leaders who need to decide where to act first.
Live management alerts
These alerts are designed to feel like a management-control dashboard rather than a basic calculator.
Book composition chart
A quick visual of the current book, overdue exposure, severe age pressure, and disputed value.
Collections diagnostic table
Use this in internal reviews with collectors, managers, and owners.
| Metric | Result | Status | Meaning |
|---|---|---|---|
| Calculate to populate diagnostics. | |||
Top 5 debtor-book focus table
This helps the team decide where attention, pressure, and management oversight should go first, even before the deeper plugin version is ready.
| Priority | Focus area | Exposure / signal | Why it matters | Recommended action |
|---|---|---|---|---|
| Calculate to populate focus priorities. | ||||
Why act now?
These points translate the figures into commercial pressure points that matter to CFOs and business owners.
Next 48 hours
Immediate actions that should happen now.
Next 7 days
Short-cycle control improvements and escalation work.
Strategic improvements
Longer-term debtor-book control improvements.
Promised-to-pay guidance
Keep payment promises under strict discipline so the file does not drift.
Pre-collection checklist
Complete these steps before external handover or formal escalation.
Optional: request a confidential callback or prepare a Kredcor enquiry
Nothing is sent automatically. This section simply helps the visitor prepare a cleaner, more decision-ready enquiry for Kredcor.
Request a Callback
Please remember:
- Your data is completely private, only you can see it.
- We will gladly assist with any queries you may have.
- We’ve been doing this for 26 years now.
- Please visit our Articles page, for more info on credit management and B2B debt collection specifically.
View the step-by-step guide below.
Kredcor Recovery Suite Calculator Manual
1) What this calculator is for
The calculator is a debtor-control and recovery-readiness tool.
It helps a business answer practical questions such as:
- Are our customers paying close to terms, or are they slipping?
- Is our overdue book still manageable, or is it hardening into a recovery problem?
- Are payment promises reliable, or are they becoming excuses for delay?
- Is our documentation strong enough for firmer action?
- How much cash may be trapped because collections are too slow?
- Is this still a routine collections issue, or is it becoming a management issue?
The calculator is most useful for credit managers, debtors clerks, CFOs, finance managers, and SME owners because it translates raw debtor-book figures into operational signals, priority actions, and management commentary. DSO and related receivables metrics are meant to be read as cash-flow and working-capital indicators, not just finance ratios.
2) What the calculator does in plain English
The calculator takes your receivables numbers and turns them into five layers of insight:
Layer 1: Collection speed
It measures how quickly your debtors are paying, using indicators like DSO, ADD, and Best Possible DSO. DSO shows overall collection speed, ADD shows how many days customers are paying late beyond terms, and Best Possible DSO isolates your current balances to show what your DSO would look like if overdue invoices were not dragging the book down.
Layer 2: Collection quality
It looks at CEI and promise kept rate to show whether your collections process is genuinely converting receivables into cash. CEI is widely used as a collection-efficiency measure, and guidance from receivables software providers commonly treats 80%+ as a good result, with much lower scores indicating a collections process that needs review.
Layer 3: Risk pressure
It measures how much of the book is overdue, how much is already in 90+ days, how concentrated the book is in the top debtors, and how much is disputed. This matters because AR aging is where collections problems become visible: an aging schedule helps identify overdue accounts, cash-flow pressure, and where stronger action may be needed.
Layer 4: Recovery readiness
It looks at documentation, payment behaviour, dispute pressure, and last-payment recency to estimate recovery probability and escalation readiness. Best Possible DSO and the gap between standard DSO and Best Possible DSO are useful precisely because that gap highlights overdue receivables and collections inefficiencies.
Layer 5: Management action
3) Before you start: which reports you need
Before entering data, collect these from your accounting or ERP system:
- aged receivables report
- statement of account totals
- credit sales report for the period
- collections notes or promise-to-pay tracker
- dispute log
- list of top debtor balances
- current customer terms
- rough estimate of internal collection cost
- rough estimate of annual funding cost / cost of capital
- gross margin percentage
For most businesses, the best time to use the calculator is:
- month-end
- quarter-end
- before a management meeting
- before external handover discussions
- when cash flow suddenly tightens
4) What to enter in every input box
A. Period and terms
Days in period
Enter the number of days for the period you are measuring.
Examples:
- monthly review: 30 or 31
- quarterly review: 90
- annual review: 365
Target payment terms (days)
Enter your normal agreed terms for the customers you are reviewing.
Examples:
- 7 days
- 14 days
- 30 days
- 45 days
- 60 days
This is important because many of the results compare real payment behaviour against your agreed terms.
B. Portfolio inputs
Credit sales for period (R)
This is the total credit sales made during the same period you are analysing.
Use:
- only credit sales
- not cash sales
- ideally net of returns and discounts, if your reporting allows it
DSO is calculated from receivables and credit sales over the same period, so matching the period correctly matters.
Opening receivables (R)
This is your total debtor book at the start of the period.
Ending receivables (R)
This is your total debtor book at the end of the period.
Ending current receivables (R)
This is the portion of your ending receivables that is still current, meaning not yet overdue.
This number is important because the calculator uses it to estimate Best Possible DSO.
Total overdue balance (R)
This is the total value of all invoices already overdue at period end.
90+ day bucket (R)
This is the amount already sitting at 90 days or older.
This bucket deserves special attention because aging schedules use these older bands to highlight serious collection risk. A large 90+ bucket is a classic warning sign in AR analysis.
Largest debtor exposure (R)
Enter the balance of your biggest single debtor.
Top 5 debtor combined exposure (R)
Enter the combined total of your five largest debtor balances.
This helps show concentration risk. A book can look healthy overall but still be dangerous if too much of it depends on a small cluster of customers.
Active debtor accounts
Enter the number of debtor accounts you are actively managing.
This is useful for context. A R500,000 overdue book across 500 customers is a different management problem from R500,000 overdue across 8 customers.
C. Behaviour, cost, and file strength
Total promises tracked
Enter the number of payment promises you are actively tracking for the period or the collection review cycle.
Broken promise count
Enter how many of those promises were missed, broken, or rolled.
This lets the calculator estimate promise kept rate and promise discipline.
Disputed amount (R)
Enter the value currently delayed by:
- invoice queries
- POD disputes
- pricing disputes
- service disputes
- “we never received it” style objections
- other unresolved reasons
This number matters because disputes often hide both real operational issues and strategic delay behaviour.
Days since last payment
Enter the number of days since the debtor of concern, or the typical severe case, last made payment.
Recent payment usually improves confidence. No recent payment is a warning.
Annual cost of capital (%)
Enter your estimated cost of carrying or funding the debtor book.
This can reflect:
- overdraft cost
- working-capital financing cost
- opportunity cost of trapped cash
- internal finance target hurdle
Monthly internal collection cost (R)
Estimate the monthly cost of chasing the overdue book.
Include things like:
- collector salaries or time allocation
- reminder calls and emails
- admin time
- dispute follow-up
- finance management time, if material
Monthly deterioration on 90+ bucket (%)
Estimate how much value you believe is lost each month on older debt because of delay.
This is a management estimate, not an accounting rule. It helps illustrate the cost of waiting.
External recovery fee (%)
Enter the likely contingency or success fee if the account is handed over externally.
Escalation / legal reserve (R)
Estimate the friction cost or reserve for escalation.
Gross margin on sales (%)
Enter your gross margin percentage.
This allows the calculator to show how much extra sales may be needed to replace trapped value.
D. Documentation readiness checkboxes
These boxes test how complete your file is.
Signed credit application
Do you have proof that the customer applied for and accepted credit?
Invoices and statement of account
Can you clearly show what is owed and reconcile it?
Delivery proof / PO / job card
Can you prove the goods or services were supplied?
Accepted terms / contract
Can you show what was agreed?
Communication and demand trail
Do you have a dated record of emails, calls, demands, and promises?
Correct debtor contact details
Do you know who pays, who approves, and who decides?
This matters because documentation strength directly affects collection leverage and escalation quality.
5) Terminology section
This is the “learn it properly” section.
Accounts Receivable (AR)
Money owed to your business by customers who bought on credit.
Debtor book
The full total of customer balances outstanding.
Current receivables
Invoices not yet overdue.
Overdue receivables
Invoices already past due date.
Aging / Age analysis
A report that groups receivables by age bucket, such as:
- current
- 1–30 days overdue
- 31–60 days overdue
- 61–90 days overdue
- 90+ days overdue
Aging schedules are standard tools for identifying overdue accounts and collection pressure.
DSO — Days Sales Outstanding
The average number of days it takes to collect payment after a credit sale.
Lower DSO is generally better, but it must be interpreted by industry and by your own terms. DSO is also part of working-capital analysis and the cash conversion cycle.
ADD — Average Days Delinquent
How many days late customers are paying beyond the due date or beyond what Best Possible DSO suggests. ADD gives a clearer view of lateness than DSO alone.
BPDSO — Best Possible DSO
The DSO that would exist if only current receivables remained. It helps separate “normal on-time book” from “overdue drag.” A large gap between DSO and Best Possible DSO usually means overdue debt and collections inefficiency are widening.
CEI — Collection Effectiveness Index
A measure of how effectively collectible receivables were converted into cash during a period. It is often used alongside DSO because it gives a fuller picture of collections performance. Guidance from AR software and advisory sources commonly treats 80%+ as good, and much lower values as a warning sign.
Promise kept rate
The share of tracked payment promises that were kept.
Broken promise ratio
The share of tracked promises that were broken.
Concentration risk
The degree to which your debtor book depends on one or a few customers.
Top-5 concentration
The share of the full debtor book represented by the five largest debtors.
Recovery probability
A practical estimate of how recoverable the overdue book appears, based on age, payment behaviour, file strength, dispute pressure, and recent payment signs.
Escalation readiness
A practical estimate of whether the file appears ready for firmer action. This is a calculator-specific management score, not a universal accounting standard.
Cost of inaction
The estimated monthly and 90-day cost of allowing the overdue situation to continue.
Trapped cash
Working capital tied up in slow collections above terms.
90+ bucket
Debt aged 90 days or more. This is often the “hardening zone” in collections, where recovery tends to become slower and more expensive.
6) What each output means
DSO
What it means
This tells you how long, on average, it takes to collect.
How to think about it
- close to terms = healthy
- moderately above terms = drifting
- far above terms = cash conversion problem
Example
If terms are 30 days and DSO is 52 days, you are collecting about 22 days slower than your commercial policy suggests.
ADD
What it means
ADD tells you the lateness beyond terms.
How to think about it
- 0–3 days: very close to expected
- 4–12 days: watch closely
- 13+ days: the book is meaningfully late
This is often one of the easiest numbers for non-finance managers to understand.
Best Possible DSO
What it means
This tells you how the book would behave if only current invoices remained.
How to think about it
- close to terms = current invoices are not the main problem
- far below actual DSO = the overdue book is dragging collections down
- above terms = even your “current” book may already be stretching payment behaviour
Practical use
Compare:
- actual DSO
- Best Possible DSO
- the gap between them
A big gap usually means the overdue portion of the book is where the real problem sits.
CEI
What it means
CEI measures how much of the collectible receivable pool was actually collected during the period.
Practical bands
- 90–100%: very strong
- 80–89%: good / acceptable
- 70–79%: weak / needs work
- below 70%: significant concern
Sources that explain CEI commonly describe 80%+ as strong or good, while much lower scores should be investigated.
Why it matters
DSO can move slowly. CEI often shows collection discipline more directly.
Overdue ratio
What it means
What percentage of the entire book is overdue.
How to think about it
- under 20%: usually healthier
- 20–40%: pressure building
- above 40%: overdue exposure is heavy
This is not a universal rule, but it is a very practical operational guide.
90+ pressure
What it means
What percentage of the whole book is already 90+.
How to think about it
- under 8%: contained
- 8–18%: watch carefully
- above 18%: serious severe-age pressure
This is one of the most useful warning indicators in the calculator.
Promise kept rate
What it means
How often debtors actually do what they said they would do.
How to think about it
- 80%+: promises mostly credible
- 60–79%: promises weakening
- below 60%: promises are no longer a reliable control tool
When promise kept rate is weak, the collector may feel busy, but real control is low.
Top-5 concentration
What it means
How much of the entire book depends on the five biggest debtors.
How to think about it
- under 35%: more diversified
- 35–55%: watch closely
- above 55%: concentration is heavy
A concentrated book is risky because a small number of debtors can cause a disproportionate liquidity shock.
Documentation readiness
What it means
How strong and complete your file is.
How to think about it
- 85%+: strong file
- 65–84%: workable but gaps remain
- below 65%: file weakness may reduce leverage
Escalation readiness
What it means
How ready the file appears for stronger action.
How to think about it
- 80%+: relatively ready
- 60–79%: almost ready
- below 60%: improve file and process first
This is especially useful before external handover discussions.
Expected net recovery
What it means
An estimate of what may still be recovered after fee and reserve assumptions.
Important note
This is a decision-support figure, not a guarantee.
Cost of inaction
What it means
An estimate of how much delay may be costing the business every month and over 90 days.
Why it matters
This is often the number that gets management attention fastest.
7) Directional DSO benchmark table by industry
Use this table as a directional reference, not a strict rulebook.
A finance glossary summarizing a 2024 survey reported the following average DSO values by broad sector: Distribution & Transportation 41, Energy & Utilities 19, Finance & Real Estate 11, Healthcare / Nonprofit / Government 22, Manufacturing & Construction 21, Retail / Food / Entertainment 26, and Technology & Professional Services 34. That same source stresses that “good” DSO depends heavily on industry.
Broad industry group | Directional average DSO |
Distribution & Transportation | 41 days |
Energy & Utilities | 19 days |
Finance & Real Estate | 11 days |
Healthcare / Nonprofit / Government | 22 days |
Manufacturing & Construction | 21 days |
Retail / Food / Entertainment | 26 days |
Technology & Professional Services | 34 days |
How to use the table
Do not ask only, “Is my DSO high?” Ask three questions:
- How does my DSO compare with my own payment terms?
- How does it compare with my industry directionally?
- Is it improving or worsening over time?
That is the right way to interpret AR days, because DSO by itself is only a high-level average. AR aging and trend analysis are essential companions.
8) Benchmark rules for the other stats
Not every metric has a clean industry benchmark. Use these practical bands:
CEI
- 90–100% = excellent
- 80–89% = good
- 70–79% = weak
- below 70% = serious concern
ADD
- 0–3 days = very good
- 4–12 days = watch
- 13+ days = collection delay is material
DSO vs terms
A practical rule of thumb is that if AR days are consistently about 25% higher than standard terms, the collections process likely needs review. Chaser cites this as a simple operational rule.
90+ bucket
There is no single universal benchmark, but aging studies from D&B show that seriously past-due balances remain important risk markers, and many sectors still have meaningful 91+ delinquency. Use the calculator’s red-amber-green logic here as a practical management guide.
Top-5 concentration and escalation readiness
These are calculator management indicators, not globally standardized industry benchmarks. Use the calculator’s thresholds consistently over time and compare business units or monthly runs against one another.
9) How to interpret the calculator like a professional
Step 1: Start with terms, DSO, ADD, and Best Possible DSO
This tells you whether the issue is:
- mostly normal trading
- moderate lateness
- serious delinquency
- or a hard overdue drag problem
Quick reading guide
- DSO near terms + low ADD + low DSO/BPDSO gap = healthier book
- DSO far above terms + high ADD + large gap = overdue drag problem
Step 2: Check CEI
CEI tells you whether your collections machine is actually converting receivables into cash.
Interpretation
- good DSO but weak CEI = your book may look okay now, but collections discipline may be weakening
- weak DSO and weak CEI = collections performance problem
- weak DSO but better CEI = old debt may be weighing down the book, but current collections may be improving
Step 3: Check overdue ratio and 90+ pressure
This tells you whether your issue is still early-stage or already hardening.
Interpretation
- high overdue ratio + low 90+ = pressure is building, but you may still rescue it internally
- high overdue ratio + high 90+ = the book is hardening
- low overdue ratio + high 90+ = a smaller set of serious problem accounts may be dragging performance
Step 4: Check promise kept rate
This tells you whether your debtor conversations are producing real payment behaviour.
Interpretation
- high promise kept rate = promises still have control value
- low promise kept rate = promises may be excuses, not solutions
This is one of the clearest signals for when routine follow-up is no longer enough.
Step 5: Check documentation readiness and escalation readiness
This tells you whether stronger action is possible and whether you are ready for it.
Interpretation
- high urgency + high readiness = action can move faster
- high urgency + low readiness = fix the file immediately
- lower urgency + low readiness = use the time to strengthen the file before the problem worsens
Step 6: Read the management alerts
These alerts translate the numbers into business language:
- cash flow alert
- severe age alert
- promise discipline alert
- escalation alert
These are especially helpful for:
- management meetings
- owner reviews
- board summaries
- handover discussions
10) Practical action plan by result
Scenario A: Healthy but watchful
Typical profile:
- DSO close to terms
- ADD low
- CEI good
- overdue ratio modest
- 90+ low
Actions
- maintain discipline
- keep statements and reminders on time
- preserve documentation quality
- watch trend monthly
- do not let current debt drift into older buckets
Scenario B: Drifting control
Typical profile:
- DSO 5–15 days above terms
- ADD moderate
- CEI weakening
- overdue ratio rising
- promise kept rate slipping
Actions
- review reminder timing
- tighten weekly aged-debt review
- separate disputes from real payment delay
- require written promises
- review top 5 debtors more closely
- escalate broken promises faster
Scenario C: Hardening arrears
Typical profile:
- DSO materially above terms
- ADD high
- 90+ bucket rising
- promise kept rate weak
- overdue ratio heavy
Actions
- create a severe-arrears work queue
- separate routine collection from recovery work
- stop tolerating rolling promises
- prepare stronger demand flow
- review stop-supply or tighter credit controls
- get management involved
Scenario D: Escalation likely justified
Typical profile:
- high 90+ pressure
- low promise reliability
- decent documentation readiness
- high urgency
- high escalation readiness
Actions
- finalise file pack
- confirm balances and proof
- complete communication trail
- prepare decision on external handover or stronger recovery action
- stop wasting internal time where return is poor
11) How to know what action to take next
Here is a simple exam-style framework.
If DSO is high, ask:
- Are terms too loose?
- Are invoices correct and timely?
- Are reminders late?
- Are a few debtors dragging the average?
If ADD is high, ask:
- Are customers paying late beyond terms as a habit?
- Are we reacting too slowly to lateness?
If Best Possible DSO is good but actual DSO is poor, ask:
- Is the overdue book the real problem?
- Which debtor cluster is dragging the average?
If CEI is weak, ask:
- Are collectors chasing the right accounts?
- Are promises being logged and followed through?
- Are disputes being closed fast enough?
If 90+ is high, ask:
- Which accounts are hardening?
- Which of them still have good file strength?
- Which should be escalated?
If promise kept rate is low, ask:
- Are we accepting vague promises?
- Are we following up same day when a promise breaks?
- Are we treating repeated broken promises too softly?
If documentation readiness is low, ask:
- What is missing?
- Who will get it?
- By when?
If top-5 concentration is high, ask:
- Are we overexposed to a few debtors?
- Do those debtors deserve tighter credit oversight?
- Is management aware of the concentration risk?
12) Example of how a user should think through the calculator
Imagine:
- terms = 30 days
- DSO = 52 days
- ADD = 17 days
- Best Possible DSO = 24 days
- CEI = 76%
- overdue ratio = 44%
- 90+ = 19%
- promise kept rate = 55%
- docs readiness = 83%
- escalation readiness = 79%
Interpretation
This tells a strong story:
- current invoices are not the main problem, because BPDSO is 24
- the overdue book is dragging the total DSO badly
- collections efficiency is weak
- 90+ is already significant
- payment promises are unreliable
- the file is reasonably strong
Management conclusion
This is no longer just a reminder-cycle problem. It is becoming a structured recovery problem.
Good next step
Move highest-risk balances into a separate severe-arrears process and prepare for stronger escalation.
13) Common mistakes users should avoid
Mistake 1: Mixing periods
Do not use:
- one month’s sales
- with a quarter-end receivables total
Keep the period consistent.
Mistake 2: Using cash sales in credit sales
The calculator is meant for credit sales, not all sales combined.
Mistake 3: Guessing current receivables incorrectly
Best Possible DSO depends heavily on this field. Use your aged receivables report carefully.
Mistake 4: Ignoring disputes
Some books look collectible until you discover a large share is stuck in unresolved operational queries.
Mistake 5: Treating promises as cash
A promise is not a payment. Promise quality matters.
Mistake 6: Looking only at one score
Never look only at DSO or only at the control score.
Read the whole story:
- speed
- quality
- risk
- readiness
- action
14) What the live management alerts are really telling you
Cash Flow Alert
This is the calculator saying:
“Slow collections are now affecting working capital.”
Severe Age Alert
This means:
“Old debt is becoming more important and more dangerous.”
Promise Discipline Alert
This means:
“What customers say and what they actually do are separating.”
Escalation Alert
This means:
“Your file may or may not be ready for stronger action. Prepare accordingly.”
15) What data source to use for each field
Field | Best source |
Credit sales for period | sales report / ERP / revenue report |
Opening receivables | prior period AR balance |
Ending receivables | current AR balance |
Current receivables | aged receivables report |
Total overdue | aged receivables report |
90+ bucket | aged receivables report |
Largest debtor | top debtor list / aged receivables |
Top 5 combined | top debtor list / aged receivables |
Total promises tracked | collections tracker |
Broken promises | collections tracker |
Disputed amount | dispute log / collections notes |
Days since last payment | debtor ledger / customer history |
Cost of capital | finance estimate |
Internal collection cost | management estimate |
90+ deterioration rate | management estimate |
External fee | likely recovery fee assumption |
Legal reserve | finance / management estimate |
Gross margin | management accounts / finance |
16) How often users should run the calculator
Small businesses
Run it:
- monthly
- and whenever cash flow tightens suddenly
Mid-size businesses
Run it:
- monthly
- before credit committee or management review
- on major debtor clusters separately
Larger / multi-branch businesses
Run it:
- monthly at total-book level
- monthly by division or branch
- on major debtor concentrations
- before external handover discussions
Trend matters. DSO and AR metrics are most useful when compared over time, not just read as one isolated number.
17) Suggested internal workflow after using the calculator
Weekly
- update promises
- close disputes
- review top exposures
- refresh severe-age list
Monthly
- run calculator
- compare this month to last month
- review top-5 concentration
- review 90+ movements
- update action plan
Quarterly
- review terms by customer segment
- tighten onboarding and documentation
- identify repeat slow payers
- review whether internal collections are still economical on certain accounts
18) Benchmarks users should remember
For easy memory:
DSO
- compare to terms
- compare to industry
- compare to trend
CEI
- 80%+ is the practical “good” line
- closer to 100% is stronger
ADD
- 0–3 = low delinquency
- 4–12 = watch
- 13+ = material lateness
DSO versus terms
- more than roughly 25% above terms on a sustained basis should trigger review
90+ pressure
- low is best
- rising is dangerous
- high needs focused attention
19) What else would make this manual even better
The next additions that would make this training pack even stronger are:
- a worked example section with 3 full case studies
- a one-page quick-start guide
- a manager version and a collector version
- a glossary appendix in alphabetical order
- a monthly review checklist
- a board-report summary template
- a Kredcor interpretation guide for when to consider external help
- a quiz / self-test section so users can check whether they understand the calculator
The strongest add-on would be a “How to gather the numbers from Sage / Xero / QuickBooks / ERP” section, because that removes the biggest beginner friction point.
20) Final takeaway
A good user should leave this calculator understanding:
- How fast are we collecting?
- How late are customers really paying beyond terms?
- How much of the book is already becoming dangerous?
- Are payment promises still believable?
- Is our file strong enough for firmer action?
- How much cash is being trapped while we wait?
- Which five things deserve attention first?
That is what makes this calculator powerful: it does not just produce numbers. It helps turn debtor information into control, prioritisation, and action.
Practical Interpretation Scenarios and What to Do Next
This section teaches the reader how to think like a skilled credit manager, CFO, or business owner.
The idea is simple:
Do not look at one number in isolation.
Look at the pattern the numbers are creating.
A good reader should learn to say:
“These numbers usually mean this kind of problem, so these are the first questions I should ask, and these are the next actions I should take.”
Scenario 1: DSO is high, but Best Possible DSO is close to terms
Example
- Terms: 30 days
- DSO: 55 days
- Best Possible DSO: 31 days
- Overdue ratio: high
What this usually means
This usually means your current invoices are not the main problem.
The main problem is that older overdue balances are dragging the whole book down.
Ask this first
- Which overdue accounts are causing most of the drag?
- Which customers are sitting in 60+, 90+, or older?
- Is the problem concentrated in a few bad accounts?
Do not start with this
- “Are all our customers paying badly?”
- “Do we need to change terms for everyone?”
Those are often the wrong first questions.
Better way to think
The current book may still be behaving reasonably.
The real issue is probably a separate bad-debt cluster inside the overdue book.
What to do next
Today
- identify the accounts causing the DSO drag
- separate them from routine collections
This week
- review each severe overdue account one by one
- decide which need recovery treatment, not normal reminder treatment
Management lesson
Do not punish the whole customer base for the behaviour of a smaller high-risk group.
Scenario 2: DSO is not terrible, but CEI is weak
Example
- Terms: 30 days
- DSO: 36 days
- CEI: 72%
What this usually means
At first glance, the book may look acceptable because DSO is not massively above terms.
But CEI is warning that the collections process itself is underperforming.
Ask this first
- Are we following up consistently?
- Are reminders going out on time?
- Are collectible balances being acted on quickly enough?
Do not start with this
- “DSO doesn’t look too bad, so we must be fine.”
That is a dangerous conclusion.
Better way to think
DSO can sometimes hide a weakening collections process.
CEI often reveals that the machine is losing efficiency before the full damage shows in DSO.
What to do next
Today
- review reminder timing and collector discipline
- check whether promises are being logged and followed up
This week
- review collector workflow
- tighten review cadence
- check whether disputes are being closed too slowly
Management lesson
A “not terrible” DSO can still sit on top of a weak process.
Scenario 3: Overdue ratio is high, but 90+ pressure is still low
Example
- Overdue ratio: 42%
- 90+ ratio: 6%
What this usually means
A lot of debt is late, but much of it has not yet hardened into severe age.
That means there may still be a strong chance to regain control internally.
Ask this first
- What is driving the recent slippage?
- Is invoicing late?
- Are disputes slowing payment?
- Are reminders not happening quickly enough?
Do not start with this
- “We need legal action immediately.”
Not yet. The debt may still be in a recoverable internal stage.
Better way to think
This is often a window of opportunity.
If the team acts firmly now, the book may be recoverable before it ages further.
What to do next
Today
- tighten current overdue follow-up
- isolate 30+, 60+, and borderline severe accounts
This week
- fix process leaks
- review disputes
- review statement timing
- review proof-of-delivery timing
Management lesson
When overdue is high but 90+ is still low, speed matters more than force.
Scenario 4: 90+ pressure is high, and documentation is strong
Example
- 90+ ratio: 21%
- Docs readiness: 90%
- Escalation readiness: 84%
What this usually means
This usually means the book is already under meaningful severe-arrears pressure, but the file is strong enough for firmer action.
Ask this first
- Which severe accounts are most commercially important?
- Which files are complete enough to move quickly?
- Which promises have already failed?
Do not start with this
- “Let’s keep sending one more friendly reminder.”
That may just waste time.
Better way to think
The real question is no longer “Do we have enough paperwork?”
The real question is “Why are we still waiting?”
What to do next
Today
- build the escalation list
- rank the accounts by size, age, and likelihood of recovery
This week
- complete final internal review
- decide which matters deserve stronger action or handover review
Management lesson
Strong documentation plus severe age usually means delay is becoming a choice, not a necessity.
Scenario 5: Promise kept rate is low
Example
- Promises tracked: 10
- Broken promises: 5
- Promise kept rate: 50%
What this usually means
The debtor is telling you one thing and doing another.
This usually means the promise process is no longer a control tool. It may now be a delay tool.
Ask this first
- Are we allowing vague promises?
- Are we following up same day when promises break?
- Are repeat offenders still being treated too softly?
Do not start with this
- “Maybe they just need more time.”
Maybe. But the data is telling you not to assume that.
Better way to think
A promise is useful only if it changes behaviour.
If it does not change behaviour, it should change your strategy.
What to do next
Today
- require exact dates and amounts for all promises
- follow up broken promises immediately
This week
- flag repeat promise breakers
- move them closer to escalation
- stop accepting endless rolling commitments
Management lesson
A promise without consequence is not control.
Scenario 6: Disputed amount is high
Example
- Overdue: R500,000
- Disputed: R140,000
- Dispute ratio: 28%
What this usually means
A major part of the overdue book may be stuck because of unresolved operational issues, or because the debtor is using disputes as cover for delay.
Ask this first
- Are these genuine disputes?
- Which team owns each dispute?
- What proof is missing?
- How long has each dispute been unresolved?
Do not start with this
- “Collections just needs to chase harder.”
Not if the delay is actually being created upstream by operations, sales, logistics, or admin.
Better way to think
A dispute-heavy book is often not just a collections problem.
It may be a cross-functional execution problem.
What to do next
Today
- create a dispute register with owner and deadline
- separate real disputes from weak excuses
This week
- assign accountability
- close evidence gaps
- stop letting disputes remain vague and open-ended
Management lesson
If disputes stay unresolved, collections becomes slower even when collectors work hard.
Scenario 7: Top-5 concentration is high
Example
- Top-5 concentration: 62%
- Largest debtor: 18%
- Overall overdue ratio: moderate
What this usually means
Your book may not look terrible overall, but your liquidity is too dependent on a small number of customers.
Ask this first
- Which of the top 5 are already showing stress?
- Are we too commercially dependent on them?
- Are their terms still appropriate?
Do not start with this
- “The rest of the ledger looks diversified enough.”
That misses the real concentration problem.
Better way to think
The issue is not just average debtor quality.
The issue is what happens if one or two major payers stall.
What to do next
Today
- review the top 5 separately from the rest of the book
- put them on management watch
This week
- review terms, limits, and dependency
- consider tighter oversight on large exposures
Management lesson
A debtor book can look statistically acceptable but still be strategically dangerous.
Scenario 8: DSO is improving, but 90+ is not
Example
- DSO slightly better than last month
- 90+ bucket unchanged or worsening
What this usually means
You may be collecting better on newer balances, but the hard core of old debt is not moving.
Ask this first
- Are we improving current collections while ignoring the oldest accounts?
- Are severe accounts getting enough specialist attention?
Do not start with this
- “Great, DSO improved, so the problem is fixed.”
Not necessarily.
Better way to think
The book may be splitting into two stories:
- better routine collections
- stuck severe debt
What to do next
Today
- identify which old accounts are not improving
- remove them from standard cycle treatment
This week
- create a severe-arrears list
- set specific action per account
Management lesson
Improving averages can hide a stubborn recovery problem underneath.
Scenario 9: Documentation readiness is weak, but urgency is high
Example
- Docs readiness: 52%
- 90+ ratio: 19%
- Promise kept rate: weak
- Urgency: high
What this usually means
The problem is serious, but the file may not be ready for strong action yet.
Ask this first
- What exactly is missing?
- Who can get it?
- How quickly can the gaps be closed?
Do not start with this
- “Let’s escalate now and hope the documents can follow later.”
That weakens leverage.
Better way to think
You may be right to escalate emotionally, but you still need to escalate well.
What to do next
Today
- list all missing file items
- assign owners and deadlines
This week
- close the most important proof gaps first
- tighten communication notes
- confirm balances and contacts
Management lesson
Urgency without preparation creates weak escalation.
Scenario 10: Escalation readiness is high, but the team is still hesitating
Example
- Docs readiness: 88%
- Escalation readiness: 82%
- 90+ ratio: high
- Broken promises: repeated
What this usually means
The numbers suggest the business may already have enough information to act, but is still psychologically stuck in “routine chasing mode.”
Ask this first
- What exactly are we waiting for?
- Is there any real missing information?
- Or are we simply uncomfortable escalating?
Do not start with this
- “Maybe one more call will change things.”
If the pattern is already clear, that may be false hope.
Better way to think
The business may not have an information problem.
It may have a decision problem.
What to do next
Today
- review the file for decision readiness
- identify whether any missing item is truly material
This week
- make a decision
- stop drifting
Management lesson
A prepared file should lead to a prepared decision.
Scenario 11: Low overdue ratio, but high ADD
Example
- Overdue ratio: 18%
- ADD: 14 days
What this usually means
A relatively small part of the book is overdue, but the overdue part that exists is meaningfully late.
Ask this first
- Is the issue concentrated in a few accounts?
- Are the overdue accounts being left too long before action?
Do not start with this
- “Only a small share is overdue, so it’s fine.”
That misses the severity of the lateness.
Better way to think
Small size does not always mean small risk.
What to do next
Today
- review the actual aged overdue list
- focus on depth of lateness, not just total proportion
This week
- identify whether specific customers are recurring slow payers
- tighten escalation triggers on those accounts
Management lesson
A smaller overdue book can still contain serious slow-paying behaviour.
Scenario 12: CEI is strong, but cost of inaction is still high
Example
- CEI: 91%
- Monthly cost of inaction: high
- Trapped cash: high
What this usually means
Your collections process may be doing many things right, but the size of the overdue book is still big enough to create real cash-flow pressure.
Ask this first
- Is the issue scale rather than discipline?
- Are a few large balances creating too much working-capital drag?
Do not start with this
- “CEI is strong, so there’s nothing to fix.”
That is incomplete thinking.
Better way to think
A good process can still sit on top of an uncomfortably large exposure.
What to do next
Today
- isolate the biggest overdue balances
- review them from a working-capital perspective
This week
- consider whether terms, limits, or collection escalation need refinement for large exposures
Management lesson
Good collections effort does not automatically mean low cash-flow risk.
Scenario 13: Promise kept rate looks fine, but days since last payment is long
Example
- Promise kept rate: 82%
- Days since last payment: 47
What this usually means
This may mean one of two things:
- the promise data is incomplete
- the promises being kept are too small or too irregular to reduce real risk
Ask this first
- Are we counting “kept” promises correctly?
- Are the payments meaningful?
- Is the customer paying enough, or just enough to buy time?
Do not start with this
- “The promise kept rate is good, so the debtor is healthy.”
That may be misleading.
Better way to think
The quality of payment matters, not just whether some payment happened.
What to do next
Today
- review actual payment value against outstanding balance
- assess whether the kept payments are commercially meaningful
This week
- strengthen promise criteria
- do not count tiny token payments as success if the balance barely moves
Management lesson
A technically “kept” promise can still be operationally weak.
Scenario 14: Gross margin is low, trapped cash is high
Example
- Gross margin: 18%
- Trapped cash: high
- Replacement sales required: very high
What this usually means
The business would need a very large amount of new sales to replace the value currently trapped in slow debtors.
Ask this first
- Is management fully aware of the sales effort needed to replace this trapped value?
- Are we treating collections as seriously as sales?
Do not start with this
- “We’ll make it up with more sales.”
That is often much harder than people think.
Better way to think
On low margins, slow collections are especially painful because replacement turnover requirements become very large.
What to do next
Today
- highlight the replacement-sales figure to management
- use it to increase urgency
This week
- review whether key slow payers are receiving too much commercial leniency
Management lesson
Low margin businesses can afford weak debtor control even less.
Scenario 15: The calculator gives mixed signals
Example
- DSO: moderate
- CEI: moderate
- overdue ratio: moderate
- 90+: low
- docs: low
- promises: mixed
What this usually means
The business may not be in crisis, but control is not as strong as it should be.
Ask this first
- Which weakness is easiest to improve quickly?
- What single correction would give the fastest lift?
Do not start with this
- “Nothing looks terrible, so let’s leave it.”
That is how books quietly deteriorate.
Better way to think
Mixed signals often mean you are standing at the beginning of a larger problem, not the end of one.
What to do next
Today
- pick the clearest weak point
- correct it immediately
This week
- run the calculator again after process improvements
- compare the movement
Management lesson
Small weaknesses compound when ignored.
Practical “Ask This, Not That” Coaching Section
This is a very useful section to add because it teaches judgment.
When DSO is high
Ask this:
Which balances are dragging the average?
Not this:
Why is every customer paying badly?
When CEI is weak
Ask this:
Is our collections process missing timing, focus, or discipline?
Not this:
Should we just blame the economy?
When 90+ is rising
Ask this:
Which accounts need a different treatment from routine reminders?
Not this:
Should we just keep sending more statements?
When promises are breaking
Ask this:
Are promises still a control tool, or just a delay tool?
Not this:
Should we keep trusting verbal commitments?
When disputes are high
Ask this:
What operational bottleneck is preventing closure?
Not this:
Why aren’t collectors pushing harder?
When docs readiness is weak
Ask this:
What exact file items are missing, and who will close them?
Not this:
Can we just escalate and see what happens?
When top-5 concentration is high
Ask this:
What happens if one or two major accounts stall?
Not this:
Is the average debtor balance acceptable?
When cost of inaction is high
Ask this:
What is this delay costing us every month?
Not this:
Can we afford to wait a little longer?
A simple hand-holding decision path
The user can follow this in order every time:
Step 1
Look at:
- DSO
- ADD
- Best Possible DSO
Ask:
- Is the problem general, or mostly overdue drag?
Step 2
Look at:
- CEI
- Promise kept rate
Ask:
- Is our collections process actually converting intent into cash?
Step 3
Look at:
- overdue ratio
- 90+ pressure
- disputed amount
Ask:
- Is this still manageable internally, or is it hardening?
Step 4
Look at:
- docs readiness
- escalation readiness
Ask:
- Are we ready for stronger action if needed?
Step 5
Look at:
- top-5 concentration
- largest debtor
Ask:
- Could a small number of customers materially affect liquidity?
Step 6
Look at:
- monthly cost of inaction
- trapped cash
- replacement sales impact
Ask:
- Can the business really afford further delay?
A final teaching note to include in the manual
A beginner should be taught this sentence:
A good collections decision is not based on one number. It is based on the pattern created by speed, ageing, behaviour, readiness, concentration, and cost.
21) Worked Examples and Case Studies
These examples are fictional, but they are designed to feel realistic. Each one teaches the reader how to interpret a pattern, not just a number.
The goal is to train the user to think like this:
- What story are the numbers telling?
- What is the real problem?
- What should I do first?
- What should I not waste time on?
Case Study 1: The Healthy Book That Still Needs Discipline
Business type
Wholesale office supplies business
Snapshot
- Terms: 30 days
- DSO: 31 days
- ADD: 1 day
- Best Possible DSO: 28 days
- CEI: 95%
- Overdue ratio: 14%
- 90+ ratio: 3%
- Promise kept rate: 89%
- Top-5 concentration: 29%
- Docs readiness: 92%
- Escalation readiness: 88%
What the numbers are saying
This is a healthy book.
Collections are close to terms. Overdue pressure is modest. Severe age is low. Payment promises are mostly reliable. Documentation is strong. The business appears to have good debtor-control discipline.
The real lesson
A healthy book still needs management attention. Healthy books become unhealthy books when discipline becomes casual.
Ask this first
- What are we doing right that we must keep doing?
- Which routines are protecting this performance?
Do not start with this
- “Everything looks good, so we can relax.”
What to do next
Today
- keep statement runs and reminder timing exact
- continue documenting promises and collector notes
This week
- review the small number of overdue accounts before they age
- protect current performance
Final management conclusion
This business does not need stronger force. It needs consistent discipline.
Case Study 2: The Book That Is Drifting Quietly
Business type
Building materials supplier
Snapshot
- Terms: 30 days
- DSO: 41 days
- ADD: 11 days
- Best Possible DSO: 29 days
- CEI: 84%
- Overdue ratio: 33%
- 90+ ratio: 7%
- Promise kept rate: 73%
- Top-5 concentration: 38%
- Docs readiness: 82%
- Escalation readiness: 71%
What the numbers are saying
The current book is not the main problem. Best Possible DSO is near terms. The real issue is that overdue balances are starting to drag the book.
This is not yet a severe-arrears crisis, but it is no longer “fine.”
Ask this first
- Which overdue accounts are causing the drag?
- Which customers are slipping repeatedly?
Do not start with this
- “We should change terms for everybody.”
What to do next
Today
- isolate the overdue accounts causing most of the delay
- review collectors’ follow-up timing
This week
- separate 30+, 60+, and repeat offenders
- tighten promise tracking
- review whether a few key customers are being treated too gently
Final management conclusion
This is a drift problem, not yet a deep recovery problem. Act early.
Case Study 3: The Book With a Serious Dispute Bottleneck
Business type
Engineering services company
Snapshot
- Terms: 30 days
- DSO: 49 days
- ADD: 19 days
- Best Possible DSO: 32 days
- CEI: 79%
- Overdue ratio: 39%
- 90+ ratio: 10%
- Promise kept rate: 76%
- Disputed amount: high
- Top-5 concentration: 41%
- Docs readiness: 68%
- Escalation readiness: 58%
What the numbers are saying
This book is under pressure, but the biggest problem may not be collections discipline alone. A large dispute load suggests that operations, delivery proof, job completion evidence, or invoice queries may be slowing payment.
Ask this first
- Are these genuine disputes or delay tactics?
- Who owns dispute resolution?
- Which documents are missing?
Do not start with this
- “Collections must just push harder.”
What to do next
Today
- create a dispute register
- assign owner and deadline to every dispute
This week
- close the biggest document gaps
- separate genuine disputes from weak excuses
- review whether disputed accounts are still being treated like normal late payers
Final management conclusion
This is a cross-functional control problem, not just a credit-control problem.
Case Study 4: The Concentration Risk Book
Business type
Specialist manufacturer
Snapshot
- Terms: 45 days
- DSO: 51 days
- ADD: 6 days
- Best Possible DSO: 43 days
- CEI: 88%
- Overdue ratio: 24%
- 90+ ratio: 6%
- Promise kept rate: 82%
- Largest debtor: 19% of book
- Top-5 concentration: 63%
- Docs readiness: 90%
- Escalation readiness: 84%
What the numbers are saying
On the surface, the book is not terrible. But the concentration risk is high. The business is too dependent on a few large customers.
Ask this first
- Which top-5 customers could materially affect cash flow if they slow down?
- Are those customers already receiving too much leniency?
Do not start with this
- “The average debtor behaviour looks acceptable.”
What to do next
Today
- review the top-5 debtors separately from the rest
- place them on management watch
This week
- review credit limits, commercial dependency, and terms
- prepare contingency thinking for a delayed large payer
Final management conclusion
This is not mainly a collections-efficiency problem. It is a strategic exposure problem.
Case Study 5: The Promise Problem
Business type
Logistics business
Snapshot
- Terms: 30 days
- DSO: 47 days
- ADD: 17 days
- Best Possible DSO: 34 days
- CEI: 81%
- Overdue ratio: 37%
- 90+ ratio: 12%
- Promises tracked: 14
- Broken promises: 7
- Promise kept rate: 50%
- Docs readiness: 78%
- Escalation readiness: 69%
What the numbers are saying
The team is speaking to debtors, but the promises are not turning into reliable payment behaviour. The business may feel busy, but control is weak.
Ask this first
- Are we accepting vague promises?
- Are broken promises being followed up immediately?
- Are repeat promise-breakers still being treated as normal cases?
Do not start with this
- “At least they are still communicating.”
What to do next
Today
- require every promise to include a date and amount
- follow up every broken promise same day
This week
- classify repeat promise-breakers as elevated-risk accounts
- stop allowing endless “next Friday” behaviour
Final management conclusion
This book has a credibility problem. Promises are no longer enough.
Case Study 6: The Hardening Severe-Arrears Book
Business type
Industrial equipment supplier
Snapshot
- Terms: 30 days
- DSO: 58 days
- ADD: 28 days
- Best Possible DSO: 30 days
- CEI: 72%
- Overdue ratio: 46%
- 90+ ratio: 22%
- Promise kept rate: 54%
- Top-5 concentration: 49%
- Docs readiness: 87%
- Escalation readiness: 82%
What the numbers are saying
This is no longer a routine collections problem. Severe arrears are high, promises are weak, and the file is strong enough to move.
Ask this first
- Which severe accounts are largest?
- Which files are complete enough for firmer action now?
Do not start with this
- “Maybe we should give it one more normal cycle.”
What to do next
Today
- rank severe accounts by size, age, and recoverability
- identify which accounts should move first
This week
- prepare internal escalation pack
- decide on stronger external or formal action where justified
Final management conclusion
This is a recovery-stage problem, not just a collections-stage problem.
Case Study 7: The Weak File, High Urgency Book
Business type
SME print and signage business
Snapshot
- Terms: 30 days
- DSO: 54 days
- ADD: 24 days
- Best Possible DSO: 33 days
- CEI: 74%
- Overdue ratio: 43%
- 90+ ratio: 18%
- Promise kept rate: 57%
- Docs readiness: 51%
- Escalation readiness: 47%
What the numbers are saying
This book is under real pressure, but the file is weak. Even if management feels ready to escalate emotionally, the paperwork may not support strong action well.
Ask this first
- What exact supporting documents are missing?
- Which missing items are mission-critical?
Do not start with this
- “We’ll escalate now and sort the paperwork out later.”
What to do next
Today
- make a missing-documents list
- assign owners and deadlines
This week
- fix the file
- complete the statement and proof pack
- strengthen note-taking and contact accuracy
Final management conclusion
Urgency is high, but preparedness is too low.
Case Study 8: The Low Margin Danger Book
Business type
Food distributor
Snapshot
- Terms: 21 days
- DSO: 34 days
- ADD: 13 days
- Best Possible DSO: 23 days
- CEI: 86%
- Overdue ratio: 29%
- 90+ ratio: 8%
- Promise kept rate: 78%
- Gross margin: low
- Trapped cash: high
What the numbers are saying
Collections are not collapsing, but because margins are low, slow debtors are still very expensive. Replacement sales required to offset trapped value may be huge.
Ask this first
- Does management understand how much extra turnover is needed to replace trapped cash?
- Are we treating collections with the same urgency as sales?
Do not start with this
- “We’ll make it up on volume.”
What to do next
Today
- put trapped cash and replacement-sales impact in front of management
This week
- tighten large slow-paying accounts
- review whether low-margin accounts are receiving too much credit leniency
Final management conclusion
Low margin businesses need sharper debtor control because delay becomes expensive very quickly.
Case Study 9: The Mixed Signals Book
Business type
IT support and managed services business
Snapshot
- Terms: 30 days
- DSO: 38 days
- ADD: 8 days
- Best Possible DSO: 30 days
- CEI: 83%
- Overdue ratio: 26%
- 90+ ratio: 5%
- Promise kept rate: 66%
- Top-5 concentration: 44%
- Docs readiness: 80%
- Escalation readiness: 67%
What the numbers are saying
This book is not in crisis, but several early warning indicators are flashing:
- delinquency exists
- CEI is not strong
- promises are weakening
- concentration is moderate
Ask this first
- Which weakness is easiest to fix fastest?
- What is the earliest warning sign here?
Do not start with this
- “Nothing looks terrible, so it’s probably okay.”
What to do next
Today
- tighten promise discipline
- review the top-5 customers
This week
- improve timing of follow-up and internal review cadence
- stop the book from sliding into a harder stage
Final management conclusion
This is an early intervention opportunity.
Case Study 10: The Owner-Led Business in Denial
Business type
Owner-managed trading business
Snapshot
- Terms: 30 days
- DSO: 63 days
- ADD: 33 days
- Best Possible DSO: 29 days
- CEI: 69%
- Overdue ratio: 52%
- 90+ ratio: 24%
- Promise kept rate: 42%
- Top-5 concentration: 61%
- Docs readiness: 83%
- Escalation readiness: 79%
What the numbers are saying
This business likely already has a serious overdue problem, but may still be hoping for informal relationship-based recovery.
Ask this first
- What exactly are we waiting for?
- Are we being commercially disciplined or emotionally hesitant?
Do not start with this
- “They’ve been a customer for years, so let’s keep trusting them.”
What to do next
Today
- separate relationship thinking from risk thinking
- review the largest severe accounts without emotion
This week
- move from hopeful chasing to structured action
- escalate where behaviour and age justify it
Final management conclusion
This is a decision problem, not an information problem.
22) Quiz / Self-Test Section
This section helps the reader test whether they actually understand the calculator.
Part A: Quick Understanding Questions
- What is DSO?
- The total overdue balance
B. The average number of days it takes to collect payment
C. The amount sitting in 90+
D. The number of debtors
Answer: B
- What does ADD show?
- The number of debtors added this month
B. Theamount of disputed invoices
C. How many days late payment is beyond terms
D. The cost of legal escalation
Answer: C
- If DSO is high but Best Possible DSO is close to terms, what is the most likely issue?
- Current invoices are the main problem
B. The overdue book is dragging performance
C. Terms are too strict for all customers
D. Documentation is always weak
Answer: B
- What is CEImainly used for?
- Measuring collection effectiveness
B. Measuring legal readiness only
C. Measuring total gross margin
D. Measuring debtor concentration only
Answer: A
- A high 90+ ratio usually means:
- The book is mostly current
B. Older debt is becoming a more serious recovery concern
C. DSO must be low
D. Promises are reliable
Answer: B
- What does a low promise kept rate usually suggest?
- Promises are a strong control tool
B. Promises may be becoming a delay tool
C. Customers are all paying early
D. Documentation is complete
Answer: B
- What doestop-5 concentration show?
- The age of the five oldest invoices
B. How much of the book is held by the top five debtors
C. The number of disputes in the top five accounts
D. The five best paying debtors
Answer: B
- If docs readiness is low and urgency is high, what should you usually do first?
- Ignore the file and escalate immediately
B. Close the file gaps and strengthen the record
C. Stop measuring the book
D. Extend terms to everyone
Answer: B
- What is trapped cash?
- Cash physically missing from the business
B. Working capital delayed because collections are too slow
C. VAT paid too early
D. Petty cash not reconciled
Answer: B
- Which question is better when CEI is weak?
- “Should we blame the economy?”
B. “Is our collections process missing timing, focus, or discipline?”
C. “Should we stop reporting?”
D. “Does this mean all customers are bad?”
Answer: B
Part B: Scenario-Based Questions
- Terms are 30 days, DSO is 52 days, Best Possible DSO is 28 days. What does that suggest?
Answer: The current book is not the main problem. The overdue book is dragging collections down.
- Overdue ratio is high, but 90+ is still low. What is the smarter first thought?
Answer: There may still be a window to regain control internally before the debt hardens further.
- Promise kept rate is 48%. What is the smarter next move?
Answer: Tighten promise discipline, require specifics, and stop allowing repeated broken promises without consequence.
- Top-5concentration is 64%. What is the key risk?
Answer: A small number of debtors could materially damage cash flow if they slow down or fail to pay.
- Escalation readiness is high, docs are strong, and 90+ is heavy. What does that usually mean?
Answer: The file may already be strong enough for firmer action, and further waiting may be unnecessary.
Part C: Short Written Reflection Questions
- Why is it dangerous to look at DSO alone?
Suggested answer: Because DSO is an average. It can hide whether the real problem is current balances, overdue drag, concentration, or weak collection quality.
- Why should a manager compare DSO with Best Possible DSO?
Suggested answer: Because the gap helps show whether overdue debt is the real driver of poor collection performance.
- Why is a strong promise kept rate not always enough by itself?
Suggested answer: Because even if some promises are kept, the payments may be too small or too slow to solve the real risk.
- Why does documentation readiness matter?
Suggested answer: Because weak documentation reduces leverage and makes stronger recovery action slower or less effective.
- Why does low gross margin make slow collections more dangerous?
Suggested answer: Because the business may need a very large amount of new sales to replace the value trapped in overdue debt.
Pass Mark Suggestion
- 16–20 correct: strong understanding
- 11–15 correct: workable understanding, but review the terminology and scenarios again
- 0–10 correct: read the manual again before relying on the calculator for decisions
23) Quick-Start Cheat Sheet
This is the “one-page” version.
Kredcor Recovery Suite Quick-Start Guide
What you need before you begin
Get these numbers:
- credit sales for the period
- opening receivables
- ending receivables
- current receivables
- total overdue
- 90+ bucket
- largest debtor
- top 5 combined debtor balances
- tracked promises
- broken promises
- disputed amount
- days since last payment
- cost of capital
- internal collection cost
- gross margin
- supporting documents status
What to enter
Enter your period correctly
Use the same time frame for:
- sales
- opening book
- closing book
Enter your terms
Use the actual agreed customer terms.
Enter current and overdue carefully
These numbers drive DSO, Best Possible DSO, overdue ratio, and severe-age analysis.
Enter promise numbers honestly
Do not count vague conversations as solid promises.
Tick documentation accurately
Do not tick boxes just because you think you can find the documents later.
What to read first after calculating
- DSO
How long, on average, are you taking to collect?
- ADD
How late are customers paying beyond terms?
- Best Possible DSO
Is the real problem current behaviour or overdue drag?
- CEI
Is your collection process actually converting receivables into cash?
- Overdue ratio and 90+ pressure
How much of the book is late, and how much is severe?
- Promise kept rate
Are promises reliable, or are they becoming excuses?
- Top-5concentration
Is too much of the book sitting with too few debtors?
- Docsreadiness and escalation readiness
Are you truly prepared for stronger action if needed?
Simple interpretation guide
If DSO is high and Best Possible DSO is near terms
Focus on the overdue book.
If CEI is weak
Focus on collections discipline and timing.
If overdue ratio is high but 90+ is low
Act quickly now before the book hardens.
If 90+ is high
Treat it as a serious recovery warning.
If promise kept rate is low
Stop relying on promises alone.
If top-5 concentration is high
Put major accounts on management watch.
If docs readiness is low
Strengthen the file before escalating.
If escalation readiness is high and urgency is high
Stop drifting and make a decision.
Questions to ask in the right order
Ask these first
- Which balances are dragging the book?
- Is the problem routine lateness or severe aging?
- Are promises working?
- Are disputes blocking payment?
- Is the file ready for firmer action?
- Are a few debtors creating too much risk?
Ask these later
- Should we change every customer’s terms?
- Should we assume the whole market is the problem?
- Should we wait another cycle just because the customer is familiar?
What to do today
- isolate the biggest overdue balances
- review the oldest accounts
- check broken promises
- check disputes
- identify missing file items
- review top-5 debtor exposures
What to do this week
- hold an aged-debt review
- assign owners to severe accounts and disputes
- tighten promise discipline
- prepare escalation-ready files where justified
- compare this month’s results to last month
When to get management involved quickly
Escalate management attention when:
- ADD is high
- CEI is weak
- 90+ is rising
- promises are repeatedly broken
- top-5 concentration is high
- trapped cash is large
- cost of inaction is becoming painful
One sentence to remember
Do not read one number by itself. Read the pattern created by collection speed, aging, behaviour, readiness, concentration, and cost.
One helpful note at the start: exact menu names can vary by accounting package, edition, country, and subscription tier. The safest method is always to search inside the software for terms like Aged Receivables, A/R Ageing, Aged Debtors, Customer Balance, Receivable Invoice Detail, or Who owes you. In current official help, QuickBooks Online shows A/R ageing reports under Reports > Standard reports > Who owes you, Xero provides Aged Receivables Summary and Aged Receivables Detail, and Sage guidance commonly points users to Customers > Reports > Aged debtors or Reporting > All reports > Aged Debtors, depending on the Sage product line.
24) Where do I find these numbers in my accounting system?
This section helps the user answer the most practical beginner question:
“I understand what the calculator wants, but where do I actually get the numbers?”
Start with these three golden rules
Rule 1: Use one time period only
If you are calculating for March, then use:
March credit sales
opening receivables at the start of March
ending receivables at the end of March
Do not mix a monthly sales figure with a quarterly aged-debt report.
Rule 2: Use your aged receivables report as your main source
For most users, the aged receivables or aged debtors report is the most important source because it usually gives:
current balances
overdue balances
30, 60, 90+ ageing buckets
customer-by-customer balances
This is why QuickBooks, Xero, and Sage all document aged receivables / aged debtors reports as core customer-debt reports.
Rule 3: Always use the same report date
If your aged receivables report is run at month-end, make sure your opening and ending balances and your sales period align to that same cut-off date. QuickBooks’ own matching guidance emphasizes running ageing reports with the correct report date settings, and Sage also highlights reconciling aged debtors back to control accounts and balances when things do not agree.
The easiest way to gather the numbers
Number 1: Credit sales for period
Look for a sales or receivable invoice detail report for the period.
Good places to look:
sales by customer report
receivable invoice detail report
customer invoice report
sales report filtered to credit sales only
Xero’s Receivable Invoice Detail report is a good example of the kind of report that shows sales invoice details for a period.
Number 2: Opening receivables
Take the total receivables balance at the start of the period.
Usually found in:
prior month aged receivables report
prior month customer balance summary
debtors control / AR control report
Number 3: Ending receivables
Take the total receivables balance at the end of the period.
Usually found in:
current month aged receivables report
customer balance summary
debtors control account
Number 4: Ending current receivables
This is the amount in the Current column of the aged receivables report.
QuickBooks’ A/R ageing summary and detail reports and Xero’s Aged Receivables reports are exactly the kind of reports that show how long balances have been outstanding.
Number 5: Total overdue balance
This is usually the sum of all overdue columns:
1–30
31–60
61–90
90+
Number 6: 90+ bucket
This is the balance specifically in the 90+ column.
Number 7: Largest debtor exposure
Sort the aged receivables report by balance and take the highest customer balance.
Number 8: Top 5 debtor combined exposure
Sort the report by balance, take the top five customers, and add them together.
Number 9: Total promises tracked
This usually does not come from the accounting package directly.
It usually comes from:
the credit controller’s follow-up sheet
CRM notes
a promise-to-pay spreadsheet
a collections notebook or task list
Number 10: Broken promises
This also normally comes from internal collections records, not from the accounting system automatically.
Number 11: Disputed amount
Use:
dispute register
customer query list
collections notes
customer-service issue log
Number 12: Days since last payment
Open the customer ledger or transaction history and find the last payment date.
Number 13: Annual cost of capital
This usually comes from finance management, not the accounting package. Use a practical business estimate.
Number 14: Monthly internal collection cost
This is usually an internal estimate based on staff time, call cost, admin cost, and management time.
Number 15: Monthly deterioration on 90+ bucket
This is a management estimate. It is not something most accounting systems will calculate automatically.
Number 16: External recovery fee
Use the fee assumption you want to model.
Number 17: Escalation / legal reserve
USe a conservative internal estimate.
Number 18: Gross margin
Use management accounts, gross profit reporting, or product-group margin reports.
What it looks like in common accounting systems
QuickBooks Online
QuickBooks’ South Africa help currently shows A/R ageing reports under Reports > Standard reports > Who owes you, with both Accounts receivable ageing summary and Accounts receivable ageing detail available. The detail report is useful when you need to see which customers have past-due balances and how long each transaction is overdue.
Practical QuickBooks workflow
Open the A/R ageing summary report.
Write down:
total receivables
current
overdue
90+
Open the detail report if you need:
largest debtor
top 5 debtors
invoice-level review
Run a sales or invoice detail report for the same period to get credit sales.
Use customer transaction history for last payment date.
Beginner tip
If the ageing report “looks wrong,” check the report date and ageing settings first. QuickBooks’ own help on matching ageing reports emphasizes report-date settings when reconciling.
Xero
Xero’s official help states that:
Aged Receivables Summary shows the amounts customers owe and how long payments have been outstanding
Aged Receivables Detail shows outstanding invoices, credit notes, overpayments, and how long they have gone unpaid
Receivable Invoice Detail is used to view details of sales invoices and related receivable items for a chosen period.
Practical Xero workflow
Run Aged Receivables Summary.
Capture:
total receivables
current
overdue buckets
90+
Run Aged Receivables Detail.
Sort by customer or amount to identify:
largest debtor
top 5 combined exposure
Run Receivable Invoice Detail for the period to estimate credit sales.
Open the customer account to check last payment date.
Beginner tip
Use the Summary report for totals and the Detail report for debtor-by-debtor investigation.
Sage
Sage’s current knowledge base shows Aged debtors reporting under Customers > Reports > Aged debtors for some Sage products, and under Reporting > All reports > Aged Debtors for others. Sage also notes that the aged debtors report lists outstanding customer invoices and unallocated customer transactions, and it provides reconciliation guidance where aged debtors does not match the control account, trial balance, or balance sheet.
Practical Sage workflow
Run the Aged Debtors report.
Capture:
total debtors
current
overdue
90+
Use the report or a customer list to identify:
largest debtor
top 5 combined
Use customer transaction history for last payment date.
Use sales invoice reports for credit sales.
Beginner tip
If Sage balances do not match what you expect, stop and reconcile first. Sage explicitly flags reconciliation between aged debtors and control/balance reports as a common support need.
If the user is not on QuickBooks, Xero, or Sage
Tell them to search inside the software for these report names:
Aged receivables
A/R ageing
Aged debtors
Customer balance summary
Customer balance detail
Receivable invoice detail
Customer ledger
Invoice ageing
Who owes you
If they still cannot find the numbers, they should ask their bookkeeper or accountant for:
month-end aged receivables report
sales by customer for the month
top debtor list
last payment dates
Mini “where do I find it?” table
Calculator field | Best report or source |
Credit sales for period | Sales report / receivable invoice detail |
Opening receivables | Prior period aged receivables |
Ending receivables | Current aged receivables |
Current receivables | Current column on aged receivables |
Total overdue | Sum of overdue columns |
90+ bucket | 90+ column |
Largest debtor | Sorted aged receivables detail |
Top 5 combined | Top five balances from aged receivables |
Total promises | Collections tracker |
Broken promises | Collections tracker |
Disputed amount | Dispute register / notes |
Days since last payment | Customer ledger / transaction history |
Gross margin | Management accounts |
Cost of capital | Finance estimate |
Internal collection cost | Internal management estimate |
25) Monthly Review Worksheet
This is the section you can give to users as a repeatable monthly discipline tool.
Monthly debtor-control review worksheet
Step 1: Basic period details
Month being reviewed: __________
Prepared by: __________
Review date: __________
Terms used for the calculator: __________ days
Step 2: Enter the raw numbers
Credit sales for period: __________
Opening receivables: __________
Ending receivables: __________
Ending current receivables: __________
Total overdue balance: __________
90+ day bucket: __________
Largest debtor exposure: __________
Top 5 debtor combined exposure: __________
Active debtor accounts: __________
Total promises tracked: __________
Broken promises: __________
Disputed amount: __________
Days since last payment: __________
Annual cost of capital: __________ %
Monthly internal collection cost: __________
Monthly deterioration on 90+ bucket: __________ %
External recovery fee: __________ %
Escalation / legal reserve: __________
Gross margin: __________ %
Step 3: Documentation checklist
Signed credit application: yes / no
Invoices and statement of account: yes / no
Delivery proof / PO / job card: yes / no
Accepted terms / contract: yes / no
Communication and demand trail: yes / no
Correct debtor contact details: yes / no
Step 4: Copy the calculator outputs
DSO: __________
ADD: __________
Best Possible DSO: __________
CEI: __________
Overdue ratio: __________
90+ pressure: __________
Promise kept rate: __________
Top-5 concentration: __________
Recovery probability: __________
Documentation readiness: __________
Escalation readiness: __________
Expected net recovery: __________
Cash trapped above terms: __________
Monthly cost of inaction: __________
90-day cost of inaction: __________
Debtor control score: __________
Step 5: Write the story in one paragraph
What do the numbers appear to be saying this month?
Step 6: Top 5 questions for this month
Which balances are dragging the book?
Is the problem current-book drift or older overdue drag?
Are payment promises still credible?
Are disputes slowing collection?
Is the file ready if stronger action is needed?
Step 7: Top 5 actions for the next 7 days
Step 8: Management escalation decision
Is stronger management attention needed?
yes / no
Is external recovery review needed?
yes / no
What must happen before that?
Step 9: Compare with last month
What improved?
What worsened?
What is the biggest unresolved risk?
How to use the worksheet well
For a debtors clerk
Focus on:
collecting the correct input data
promise tracking
dispute tracking
top account notes
For a credit manager
Focus on:
patterns
repeat offenders
severe arrears
top-5 concentration
action ownership
For a CFO or owner
Focus on:
trapped cash
cost of inaction
concentration risk
recovery readiness
management decision timing
26) Manager Report Template
This is the “I need to explain the situation clearly to management” section.
Monthly debtor-control manager report template
Title
Debtor Control and Recovery Readiness Summary — [Month / Period]
- Executive summary
This month’s calculator output suggests that the debtor book is currently in a [healthy / drifting / pressured / severe] state. DSO is [x] days against terms of [y] days, CEI is [z]%, and [a]% of the book is overdue. The 90+ bucket stands at [b]% of the ledger, which indicates [contained / moderate / elevated / severe] older-debt pressure. Estimated trapped cash above terms is [R___], with an estimated monthly cost of inaction of [R___].
- Whatappears to be happening
The numbers suggest that the main issue is:
current-book drift
older overdue drag
weak promise discipline
high dispute friction
concentration risk
weak file strength
mixed factors
Short explanation:
- Key warning signs
DSO vs terms: __________________________________
ADD: _________________________________________
CEI: __________________________________________
Overdue ratio: _________________________________
90+ ratio: ____________________________________
Promise kept rate: _____________________________
Top-5 concentration: ____________________________
Escalation readiness: ___________________________
- Commercial impact
The likely commercial impact is:
slower cash conversion
working-capital strain
higher management time drain
increased severe-age pressure
possible weakening of recovery outcomes
concentration risk if key debtors delay further
- Top accounts or risk clusters needing attention
- Immediate actions recommended
Today / next 48 hours
Within 7 days
- Escalation view
The calculator suggests that stronger action is:
not required yet
should be prepared
should be seriously considered now
is likely already justified
Reason:
- What management needs to decide
Management needs to decide:
whether to tolerate further delay
whether to tighten treatment of top-risk accounts
whether to move certain accounts out of routine collections
whether to approve stronger escalation steps
- Prepared by
Name: ____________________
Role: ____________________
Date: ____________________
How to speak about the result in a management meeting
A good manager should say things like:
“The issue is not the whole book equally; it is concentrated in a smaller high-risk cluster.”
“The current book is closer to terms than the full DSO suggests, so overdue drag is the core problem.”
“Promise reliability is weakening, so verbal commitments are not enough.”
“The file is almost ready, but documentation gaps still need to be closed before stronger action.”
“The cost of waiting is now meaningful enough that this should receive management attention.”
A weaker way to speak would be:
“Collections is struggling.”
“Customers are paying badly.”
“The economy is bad.”
“We just need more follow-up.”
The stronger language is better because it is specific and action-oriented.
27) Common Debtor Objections and What They Usually Mean
This section is extremely practical because users hear these phrases every day.
Important: an objection does not always mean the debtor is dishonest. But it usually means the collector should stop reacting emotionally and start diagnosing the real issue.
Objection 1: “Please resend the invoice.”
What it may mean:
They genuinely do not have it
They are buying time
Their internal process is poor
Your invoice delivery process may be weak
Better question
“Has the invoice now been received, and what exact date will payment be made?”
Do not stop at
“Sure, I’ll resend it.”
What to do next
resend immediately
ask for confirmation of receipt
get the name of the person who received it
confirm payment date in writing
Objection 2: “We are waiting for the POD / signed delivery note.”
What it may mean
Genuine documentation requirement
Internal excuse for delay
Your own file may be incomplete
Better question:
“Who exactly needs it, and by when can they confirm payment once it is received?”
What to do next
send the POD immediately
ask whether anything else is missing
confirm whether this fully resolves the hold-up
Objection 3: “The buyer hasn’t signed off yet.”
What it may mean
Internal approval delay
Slow internal process
Soft resistance to paying now
Better question
“When is sign-off expected, and who is the approving person?”
What to do next
get the name and role of approver
set a follow-up date
ask whether any other document is still required
Objection 4: “Cash flow is tight.”
What it may mean
Genuine financial pressure
A priority problem rather than a paperwork problem
Increased credit-risk signal
Better question:
“What amount can be paid now, and on what exact dates will the balance be cleared?”
Do not ask first:
“Why is your cash flow tight?”
That may create conversation but not payment.
What to do next
move from explanation to commitment
require a dated payment plan
tighten monitoring
treat broken commitments seriously
Objection 5: “We’ll pay next week.”
What it may mean
Sometimes true
Often a rolling delay phrase
Better question:
“What exact date, what exact amount, and by what payment method?”
What to do next
confirm in writing
log it as a promise
follow up same day if missed
Objection 6: “There is a dispute.”
What it may mean
Genuine operational issue
Delay tactic
Missing proof
Weak internal process
Better question
“What exactly is disputed, what evidence is needed, and who owns the resolution?”
What to do next
separate real disputes from vague ones
assign owner and deadline
do not leave the dispute undefined
Objection 7: “Your statement does not match our records.”
What it may mean
Genuine reconciliation issue
Unallocated cash
Credit note confusion
Delay excuse
Better question:
“Which items do not match, and can we reconcile line by line today?”
What to do next
reconcile immediately
identify exact differences
confirm corrected balance in writing
Objection 8: “The person who handles payments is not in.”
What it may mean
Temporary delay
Easy stalling technique
Weak contact management on your side
Better question:
“Who covers in their absence, and when exactly will they be back?”
What to do next
get secondary contact
improve debtor contact records
diarise follow-up precisely
Objection 9: “We’ve already paid.”
What it may mean
Genuine timing issue
Unallocated payment
Incorrect account reference
False claim
Better question:
“Please send proof of payment now so we can allocate it correctly.”
What to do next
request POP immediately
verify bank reference
confirm allocation outcome
Objection 10: “The system is down.”
What it may mean
Genuine delay
Convenient stalling
Poor internal process
Better question
“When will the system be back, and what date has been set for payment once it is restored?”
What to do next
log the explanation
get a dated commitment
follow up promptly once the stated obstacle is gone
Objection 11: “We are waiting for our customer to pay us.”
What it may mean
Genuine cash pressure
Your debtor is financing itself through your balance
Increased risk signal
Better question:
“What amount can you pay now while the remainder is pending?”
What to do next
push for partial payment
avoid open-ended waiting
review whether continued credit exposure remains sensible
Objection 12: “The amount is too small to process right now.”
What it may mean
Low urgency for them
Weak payment priority
Delay by convenience
Better question
“What date has been allocated for payment, and can you confirm it in writing?”
What to do next
do not argue emotionally
move to specific commitment
track whether this customer repeatedly deprioritises your invoices
How to teach users to respond well
The right pattern is:
Step 1: Clarify
What exactly is the issue?
Step 2: Identify the owner
Who must act?
Step 3: Get a date
By when?
Step 4: Confirm in writing
What was agreed?
Step 5: Follow through
Was it done?
This is far better than:
arguing
accepting vague excuses
feeling reassured by friendly language
allowing undefined delays
A very useful teaching rule
Every objection should lead to one of three outcomes:
proof supplied,
date committed, or
escalation considered.
That one rule alone will make many users better collectors.
We can effectively assist you with your outstanding debt, and so improve your cash flow and minimise your credit risk.