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What formula do you use to calculate Average AR Days?

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Last Post by Anonymous 12 years ago

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angelahunsberger

(@angelahunsberger)

Posts: 290

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Topic starter

If you were going to calculate your average days in AR, what reports do you run? What formula do you use? What about accounting for contractual adjustments? What about gross vs. net charges?

I was always told the following (but now I am questioning this):

1. Run the Aging By Financial Class to get your TOTAL AR

2. Run the Payments report for the last 90 days to get your TOTAL PAYMENTS.

3. TOTAL PAYMENTS divided by 90 days = AVERAGE DAILY REVENUE

Then, using these items, here is the calculation:

TOTAL AR divided by AVERAGE DAILY REVENUE = AVERAGE DAYS in AR.

Posted : July 10, 2012 11:34 pm

angelahunsberger

(@angelahunsberger)

Posts: 290

Reputable Member

Topic starter

I haven't had anyone respond to this, but I have been researching on my own. What do you think of this formula instead? It takes the CHARGES rather than cash/payments. The forumula before doesn’t seem right because it uses the payments report rather than the charges. That formula makes cash (as the numerator) inconsistent with revenue (in the denominator). By definition, ADR is average daily revenue not cash collected and posted.

Run the AR by financial class report and go to the last page to get the Total AR.
Run monthly financial summary and write down Total Charges.
Take the Total CHARGES divided by 90 days = Average Daily Revenue
Final Formula: Take Total AR divided by Average Daily Revenue = Average AR Days

Thoughts about this?

Posted : July 16, 2012 2:26 am

Anonymous

(@Anonymous)

Posts: 0

New Member Guest

let me send you some screen shots of reports taht pull the info your looking for

Posted : July 20, 2012 2:09 am

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