A similar assumption holds for debtors. Once management has established an efficient debt collection process, the number of days it takes, on average, for trade debtors to pay becomes fairly constant over time and can be used to estimate future debtors.
The formula for debtor days is as follows:
Here, opening debtors is the count of debtors at the beginning of the year, and closing debtors is the count of debtors at the end of the year.