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In todays video, Im going to explain how accounts receivable turnover ratio works, including the formula, an example calculation, and how to improve your turnover ratio. Im Priyanka Prakash, small business expert and senior staff writer at Fundera. Accounts receivable turnover ratio basically tells you how good a job your business does at collecting on invoices. Many small business owners, especially B2B businesses, bill their customers using invoices. Customers normally get a specific period of time 30, 60, or 90 days to pay those invoices. The faster customers pay you, the better it is for your businesss cash flow and financial health. Lets dive right into the accounts receivable turnover ratio formula. Accounts receivable turnover ratio equals your net credit sales divided by your average accounts receivable. in this formula, net credit sales means the portion of your annual sales that are tied up in invoices. Instead of receiving immediate payment for the sales, you extend cre