Calculate the Cost of Credit (accounts receivable cost) of your company

Calul du coût du crédit

The accounts receivable are a cost for businesseses. This principle is obvious to any business manager.

It is necessary to evaluate this cost in order to:

Assess the Return on Investment of a AR financing project
Define its business strategy on payment terms taking into account this cost when assessing the profitability of a quotation.
Set up discount offers for early payments.
Establishing the interest rate of late payment penalties.
Educate its sales people to obtain advance payments and best payment terms.

Liability type	Amount	%	Financial cost in %
Equity
Working capital (equity - fixed assets)
Dividends paid on the last financial year
or expected profitability of shareholders in %
Medium and long term debt
Bank overdrafts
Accounts payable
Other debts
Total balance sheet

Cost of Credit :

Connexions with other tools

This tool is linked to the DSO calculation. When you have subscribed, the cost of financing is used to calculate the cost of DSO and overdues.