I'm trying to calculate the cost of waiting 30 extra days to receive money from a customer. Here's the situation:
How much would this cost a company per year if a customer pays us in 60 days vs. 30 days. Assume $500,000 in sales per year. Our return is 3.6%.
I am not trying to factor the receivables. I am just trying to calculate how much it costs to wait to get our money 30 days later. I have my own calculations, but I just want to verify them with someone else's or with stuff I can find online. Here are my calculations below:
(60-30) ÷ 365 * $500,000 * .036 = $1,479