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How do I calculate debtor days for a healthcare practice?
Debtor days is trade receivables divided by credit revenue for the period, multiplied by the number of days in the period. It estimates the average number of days between billing and getting paid.
Example: 150,000 owed, 600,000 billed over 90 days gives 150,000 / 600,000 x 90, about 22.5 days.
It matters because slow collection ties up working capital.
Commonly misread:
- Using total revenue that includes cash payments taken at the desk, which lowers the figure.
- Mixing medical-aid or insurer debt and patient debt. Their delays and risks differ, so report them separately.
- Relying on the average, which hides a small number of very old balances.
Read it alongside an aged debtors report, and track it monthly against your own history.
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