Accounts Receivable Turnover ratio

It is a financial ratio and it measures the ratio of net credit sales to average accounts receivable, which is a measure of how quickly customers pay their bills.

Accounts receivable turnover measures how quickly customers pay. It is typically calculated as net credit sales divided by average accounts receivable; higher turnover indicates faster collection.

- Used in the purchase-to-pay cycle to validate invoices, approvals, and supporting documents.
- Used to strengthen internal controls over purchasing and supplier payments.

- Example: Before payment, the AP team applies **Accounts Receivable Turnover ratio** to confirm the invoice matches the approved purchase documentation.

- Why it matters: Prevents incorrect/duplicate payments, reduces fraud risk, and improves accuracy of payables and expenses.