We often get questions regarding how to best model Accounts Receivable scenarios. Very often our customers will have questions about how they can model there collections assumptions into PlanGuru when the most popular tool "Average days to collect" doesn't meet there needs. If you have yet to read our About Modeling Sample post, get started by doing so. Our about post will introduce you to the general format of our modeling samples and give you a better understanding of how to follow and use the information provided here.
Please see the attached modeling sample company. Here are the A/R collection assumptions in this example:
1. 50% of Cash is collected on current month sales, with the remaining half as sales on account.
2. 25% of current month sales will be collected on in the following month.
3. 15% of current month sales are collected on two months time.
4. And the remaining 10% of current month sales will be collected in the 3rd subsequent month.
While this example probably doesn't mirror exactly how your sales are collected upon, but it should provide some insight as to how you can use the non-financials section to model your receivables.