Debtors/Creditors Analysis Dashboard is used to manage cash flow, assess financial health, make informed decisions, and optimize working capital. It provides valuable insights that support efficient financial management and strategic planning, ultimately contributing to the financial stability and success of the organization.
Cash Flow Management: Real-time visibility into the amounts owed by customers (debtors) and the amounts the company owes to suppliers (creditors).
Aging Analysis: It typically includes aging analysis, which categorizes outstanding invoices by their due dates (e.g., current, 30 days overdue, 60 days overdue). This helps in prioritizing collections and payments.
Financial Health Assessment: By comparing the total amount owed by customers to the total amount owed to suppliers, the dashboard assesses the company’s liquidity.
Risk Assessment: An analysis of the aging of debtors can highlight potential credit risks. For example, a high percentage of overdue debtors may indicate a risk of bad debts or collection challenges.
Credit Policies: The dashboard helps in setting and adjusting credit policies by providing insights into how quickly customers pay their invoices and which customers have outstanding balances.
Supplier Relationships: Analyzing creditors data helps in managing relationships with suppliers, negotiating payment terms, and optimizing working capital.
Performance Measurement: The dashboard tracks collection efficiency, helping organizations measure how quickly they convert accounts receivable into cash. This metric is crucial for evaluating the effectiveness of the credit and collection department.
Payment Efficiency: Similarly, it measures payment efficiency, showing how well the company manages its accounts payable and adheres to payment terms.
Strategy and Planning: By analyzing historical data and trends, the dashboard assists in cash flow forecasting, helping businesses anticipate cash needs and potential cash shortfalls.
Optimizing Working Capital: It enables businesses to optimize working capital by identifying areas where they can accelerate collections or extend payment terms.
Compliance and Reporting: In some industries, there are regulatory requirements for reporting on debtors and creditors. The dashboard simplifies compliance by providing readily available data.