How to Reduce Debtor Days: A Guide for Wholesalers

Managing cash flow effectively is crucial for the success of any wholesale business.

One of the key metrics to focus on is debtor days—the average number of days it takes for your customers to pay their invoices.

The longer your debtor days, the more strain it puts on your cash flow. Here’s a comprehensive guide on how wholesalers can reduce debtor days and improve their financial stability.


Understand Your Current Debtor Days

Before you can improve, you need to understand where you stand. Calculate your current debtor days using the formula:

Debtor Days = (Total Credit Sales\Accounts Receivable​) × 365

Once you have this figure, you can set realistic goals for reducing it.


Implement Clear Credit Policies

Having a well-defined credit policy is essential. Clearly outline the terms of credit, including payment deadlines, interest on late payments, and any early payment discounts.

Ensure your customers are fully aware of these terms before extending credit.

Conduct Credit Checks

Before extending credit to new customers, perform thorough credit checks. This helps you assess their ability to pay on time and reduce the risk of late payments. Regularly review the creditworthiness of existing customers as well.


Send Prompt and Accurate Invoices

Delays in sending invoices can lead to delays in payment. Ensure that invoices are sent promptly and contain all necessary details, such as:

  • Invoice number
  • Due date
  • Amount due
  • Payment instructions

Using invoicing software can help streamline this process and reduce errors.


Offer Multiple Payment Methods

Make it as easy as possible for customers to pay you. Offering multiple payment options—such as credit cards, direct debit, and online payment gateways—can help speed up the payment process.


Automate Payment Reminders

Automated payment reminders can significantly reduce debtor days. Set up a schedule to send reminders before and after the due date. Gentle, polite reminders can nudge customers to pay on time without damaging the business relationship.


Provide Early Payment Incentives

Incentivize early payments by offering discounts. For example, you could offer a 2% discount if the invoice is paid within 10 days. This can encourage customers to prioritize your invoice over others.


Regularly Review Accounts Receivable

Regularly reviewing your accounts receivable allows you to identify any potential issues early. Follow up on overdue invoices promptly and maintain communication with customers to understand any issues they may be facing.


Leverage Technology with PencilPay

One of the most effective ways to reduce debtor days is to leverage technology. PencilPay offers a suite of tools designed to automate and streamline your accounts receivable process:


  • Digital Credit Applications: Onboard customers with online credit applications that verify company data and store payment methods for security.
  • Automated Payment Reminders: Schedule and send automated payment reminders to ensure customers pay on time.
  • Auto Billing: Automatically charge stored payment methods on the due date, ensuring timely payments.
  • Custom Payment Plans: Set up tailored payment plans for customers struggling to pay on time, helping them manage their cash flow and ensuring you get paid.


Monitor and Adjust

Finally, continually monitor the effectiveness of your strategies. Track your debtor days regularly and make adjustments as needed. What works for one customer may not work for another, so be flexible and ready to adapt your approach.



Reducing debtor days is essential for maintaining a healthy cash flow in your wholesale business.

By implementing clear credit policies, using technology like PencilPay, and regularly reviewing your processes, you can ensure timely payments and improve your financial stability.

Start taking these steps today and watch your debtor days decrease, freeing up working capital and strengthening your business’s financial position.