The two costs it counts
Carrying cost. Money a store owes you is money you can't use. If you borrow to cover the gap, it costs you interest. If you don't borrow, it is cash you could have put into inventory or payroll. The calculator multiplies the invoice amount by your yearly cost of money and by the share of a year the invoice has been late.
Time spent chasing. Calls, texts, emails and visits to ask about one invoice add up. Enter the hours and what that person's time costs you.
What it leaves out on purpose
Old invoices get harder to collect, and some never get paid. We don't add a write-off percentage, because we haven't found a published, sourced figure for cannabis wholesale that we trust. If you know your own write-off rate, the carrying cost here is the floor, not the ceiling.
Use your own numbers
- Cost of money: the yearly rate on the credit line or loan you use to cover the gap. No loan? Use what that cash would earn you elsewhere.
- Dates: enter them as MM/DD/YYYY. The as-of date starts at today.
- Hours: count everyone who touched it: you, your sales rep, your bookkeeper.
Lower the cost next time
The cheapest late invoice is one that gets paid on time: invoice on shipment, remind on a schedule and give stores a one-click way to pay. When a store is already behind, a signed promise to pay letter or a payment plan agreement gets you a date instead of another week of silence. To have the chasing done for you in your name, see ShelfSpace collections.
Want the portfolio view instead of one invoice? Try the DSO calculator.