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High value charge accounts

Alert Message

NNN Charge accounts have outstanding balances greater than an average days sales. Is this a risk if they don't pay?

One Charge account has an outstanding balance XXX times greater than average days revenue. Is this a risk if they don't pay?


High Priority Indicator

This is a HIGH severity problem for many environments


Advisor calculated an average days turnover for your stores and then compared how many charge accounts had outstanding balances higher than this amount. This provides a rough proxy as to how much damage this account becoming a bad debt would be to your business.

High value accounts are potentially a risk to you if the account holder does not pay. Unfortunately these accounts are often your best customers so solving this issue may not be simple.

For example if your average days sales are $1000, and a charge account has an outstanding balance of $5000 and your gross margin is 50%, then it will take $ 5000 / ( $1000 * 50% ) = 10 days of trading to recover this debt should the account holder default.

Action to take