An accounts receivable ROI calculator compares the yearly benefit of faster collections with the yearly cost of the software: ROI % = (annual benefit - annual cost) / annual cost x 100. The benefit is staff hours saved, lower bad debt and the financing value of a shorter DSO. Cash released by the DSO cut is one-off and shown separately.
- Your own quote: the calculator below takes the software price and set-up cost you were given, with set-up spread over 3 years.
- Three drivers: labor saved (hours x share automated x 52 x hourly cost), bad debt avoided, and financing value (cash released x cost of capital).
- Four outputs: ROI %, payback months, break-even software price, and cash released shown apart from the yearly benefit.
UK businesses affected by late payment spend 86 staff hours a year chasing invoices, by Department for Business and Trade research. The default of 6 hours a week is 312 a year because it counts statements and reconciling as well as chasing; enter your own timesheet figure.
You have a vendor quote and a DSO figure from your ledger. Here is what those numbers are worth together, with the one-off cash kept out of the yearly return.
Enter your credit revenue, current and target DSO, AR hours and hourly cost, bad debt rate and the vendor quote. The calculator returns labor saved, bad debt avoided, financing value, ROI %, payback months and a break-even software price, and updates as you type. Defaults are editable examples.
| Line | Per year |
|---|---|
| Labor saved | $4,680 |
| Bad debt avoided | $4,000 |
| Financing value of cash released | $2,192 |
| Annual benefit | $10,872 |
| Annual cost (software + set-up / 3) | $1,400 |
| Cash released (one-off) | $27,397 |
ROI % = (annual benefit - annual cost) / annual cost x 100, set-up spread over 3 years · What is an accounts receivable ROI calculator?
An accounts receivable ROI calculator works out the return on investment (ROI) from collecting invoices faster: the yearly benefit of less staff time and fewer write-offs, set against the yearly cost of the software or process behind it.
- Inputs: annual credit revenue, current and target days sales outstanding (DSO), AR staff hours per week, loaded hourly cost, the share of chasing time automated, bad debt rate and expected reduction, cost of capital, software cost per year and one-off set-up cost.
- Outputs: labor saved, bad debt avoided, the financing value of cash released, annual benefit, ROI %, payback period in months and the break-even software price.
- Separate line: cash released by the DSO cut, a one-off balance that is not yearly profit.
- Uses: a business case for AR automation software, a credit control hire, or a change in payment terms.
How do you calculate accounts receivable ROI?
Accounts receivable ROI is calculated by adding up three yearly benefits, subtracting the yearly cost, and dividing by that cost. Each line below is one formula that uses figures from your ledger, payroll records and vendor quote.
- Labor saved = hours per week x share automated x 52 x loaded hourly cost.
- Cash released = (current DSO - target DSO) x annual credit revenue / 365. One-off, kept out of the yearly benefit.
- Financing value = cash released x cost of capital. This part is yearly and counts.
- Bad debt avoided = annual credit revenue x bad debt % x expected reduction.
- Annual benefit = labor saved + financing value + bad debt avoided.
- Annual cost = software cost per year + set-up cost / 3. Set-up cost is the one-off implementation and training fee.
- ROI % = (annual benefit - annual cost) / annual cost x 100.
- Payback months = (software cost + set-up cost) / (annual benefit / 12).
- Break-even software price = annual benefit - set-up cost / 3. Above this price the ROI turns negative.
- In one line: ROI % = (labor saved + bad debt avoided + financing value - annual cost) / annual cost x 100.
If you need the receivables balance first, the accounts receivable calculator estimates it from sales and DSO.
What savings does AR automation produce?
AR automation produces savings in three places: staff time on reminders and statements, bad debt that never reaches write-off, and interest on the cash a shorter DSO releases. A fourth, late fees collected, is real but left out of the ROI here.
| Driver | Input you need | Counts in yearly ROI? |
|---|---|---|
| Labor saved | Chasing hours; hourly cost | Yes |
| Bad debt avoided | Last year's write-offs as a share of credit revenue | Yes |
| Financing value | Current DSO, target DSO, your borrowing rate | Yes |
| Cash released | Current and target DSO | No (one-off) |
| Late fees and interest | Your late fee policy | Not in this calculator |
For a loaded hourly cost, start from public pay data. US bookkeeping and accounting clerks earn a median of $24.36 an hour (Bureau of Labor Statistics, May 2025 data). UK full-time median hourly pay is £19.67 (ONS, April 2025). The default of 30 is an example that includes on-costs.
For bad debt, the Atradius Payment Practices Barometer for the UK (2026) reports losses of up to 2% of B2B invoices, with most respondents under 1%. The default of 1% sits inside that range. Which levers move DSO is covered in how to reduce DSO.
Is cash released by a lower DSO part of ROI?
Cash released by a lower DSO is not part of yearly ROI, because it arrives once, when receivables fall to the new level, and does not repeat the next year. Only the financing cost it saves repeats each year.
Take the default example: a 5-day DSO cut on $2,000,000 of credit revenue releases $27,397, once. Counting it as yearly profit would multiply the ROI several times over.
Some calculators add the one-off cash to the yearly figure (see the table below). Here it stays on its own line: the calculator above adds only $2,192 (8% of it) to the yearly benefit.
The released cash still matters: report it as working capital, next to the ROI.
What does an accounts receivable ROI example look like?
An accounts receivable ROI example with the calculator's default inputs gives a 677% return and a payback of 2.0 months, on a software quote of $1,200 a year.
- Inputs: $2,000,000 annual credit revenue; DSO 45 days to 40 days; 6 AR hours a week at $30 an hour, 50% automated; bad debt 1% of revenue, cut by 20%; cost of capital 8%; software $1,200 a year; set-up $600.
- Labor saved: 6 x 50% x 52 x $30 = $4,680 a year.
- Bad debt avoided: $2,000,000 x 1% x 20% = $4,000 a year.
- Cash released: 5 x $2,000,000 / 365 = $27,397, one-off. Financing value: $27,397 x 8% = $2,192 a year.
- Annual benefit: $4,680 + $4,000 + $2,192 = $10,872. Annual cost: $1,200 + $600 / 3 = $1,400.
- ROI: ($10,872 - $1,400) / $1,400 = 677%. Payback: $1,800 / ($10,872 / 12) = 2.0 months. Break-even software price: $10,672 a year.
The return is high because the quote is small against the revenue. With the default inputs, at half the annual benefit the ROI is 288% and the payback 4.0 months; the calculator prints this inside its verdict. A $12,000 a year quote pulls it below 0% on these inputs. The break-even line shows this threshold.
What is a good ROI and payback for AR automation?
As a rule of thumb, a good ROI for AR automation is anything well above your cost of capital, with a payback period inside 12 months, because the benefit depends on staff take-up and customer behavior.
- Payback under 6 months: the case holds even if half the assumed savings fail to appear.
- Payback 6 to 12 months: the case holds only if the savings arrive in full; test the labor share before you sign.
- Payback over 12 months: the quote is large against the revenue. Check the break-even price and negotiate, or drop a module.
Any quote below the break-even price has a positive ROI on your inputs. Take the ROI, payback and cash released lines to your finance lead as three separate numbers.
An ROI of 20% means each $1 of yearly cost returns $1.20 of benefit, which is a payback of 10 months when there is no set-up fee. That is positive but thin, so it holds only if take-up matches the plan.
Two more things inflate ROI besides the one-off cash: leaving out set-up and training, and assuming all chasing time disappears. Someone still reads replies, approves payment plans and handles disputes, so do not assume the automated share is 100%; the default here is 50%. Metrics to track after go-live are in credit control metrics.
Rerun the calculator with your actual hours and DSO after 90 days and again after 12 months. If the ROI falls short, check how much of the chasing the team has handed over to the tool.
What do other AR ROI calculators ask for?
Other AR ROI calculators ask for revenue, DSO, team size and salary, then fix the cost side or the improvement rate inside the tool. Use your own quote and DSO in any of them. The tools themselves are compared in the best AR automation software guide.
Centime, Kolleno, QuickReceivable and Tesorio show a result with no form, as does the calculator on this page. Chaser, Esker, ezyCollect and Quadient AR ask for an email address or a report form before or alongside the result.
Paidnice publishes a vendor-reported 40% lower DSO on average, compared with each customer's DSO when they started; test it as your target DSO. Choose Paidnice if you run Xero or QuickBooks Online and want reminders, late fees and statements.
| Tool | Form? | Inputs it asks for | Choose it if |
|---|---|---|---|
| Centime | No | Trailing 12-month AR, payment terms, collector count, aging buckets with a reduction % per bucket | Fixed cost of capital, no software cost. Choose Centime's calculator if you have an aged debtors report and want the reduction tied to aging buckets. |
| Chaser | Email for the result | Monthly invoices, AR staff salary, current DSO, annual revenue, unrecoverable debt %, a confidence level | Plan price follows the invoice band; a confidence setting changes the result. Choose Chaser's calculator if you want a monthly cost-of-delay figure and expect to give an email address. |
| Esker | Optional report form | Suite choice, currency, annual credit sales, AR FTEs, salary, inputs per module | Implementation cost is entered as a share of savings. Choose Esker's calculator if you are an enterprise pricing several order-to-cash modules and want FTE capacity freed. |
| ezyCollect | Form before the result | Annual sales, annual bad debts, days to pay, share of customers overdue, debtor count, AR headcount, salary, time shares | Cost of capital and days-to-pay gain fixed inside; subscription set by debtor count. Choose ezyCollect's calculator if you are in Australia, count debtors rather than invoices, and want a cost-of-doing-nothing figure. |
| Kolleno | No | Revenue, size of the credit control team, invoices per month by band, which modules to optimize | No cost side, so one savings figure. Choose Kolleno's calculator if you want a quick savings headline for a mid-market team before a demo. |
| Quadient AR | Report form | AR FTEs, invoices per month, hourly AR salary, annual write-off, revenue, revenue growth | 3-year NPV with a discount rate and a risk adjustment; no DSO input. Choose Quadient's calculator if your board wants a 3-year NPV and avoided hires rather than a yearly ROI. |
| QuickReceivable | No | Annual revenue, current DSO, AR team FTEs, monthly invoice count | Software cost fixed at $12,000 a year; cash-flow gain counted in the ROI. Choose QuickReceivable's calculator if you want four inputs and an instant figure, then re-check it with your quote here. |
| Tesorio | No | Annual revenue, current DSO, team size, average invoice value, cost per employee, confidence level | No software cost; the year-one total includes working capital freed. Choose Tesorio's calculator if you want sliders, a projected DSO and hours saved for a larger collections team. |
Prices for the tools that publish them, in USD, are compared in credit control software pricing.
Which inputs do I need before I start?
Before you start an accounts receivable ROI calculation you need six numbers from your own records: credit revenue, DSO, AR hours, hourly cost, bad debt and the vendor's quote. The rest are assumptions you can leave at the defaults.
- Annual credit revenue: sales invoiced on terms, from your profit and loss. Leave out cash sales.
- Current DSO: average open receivables / annual credit revenue x 365, the textbook formula in OpenStax Principles of Accounting. The AR turnover ratio calculator gives it from turnover.
- AR hours per week: ask the people who chase. Reminders, statements, payment matching and replies.
- Loaded hourly cost: salary / hours worked, plus on-costs such as employer tax and pension.
- Bad debt rate: write-offs in the last year as a share of credit revenue.
- Quote: software per year and any set-up or training fee.
Target DSO, the automated share, the bad debt cut and cost of capital are judgment calls. Use the DSO cut your vendor can evidence, then run a conservative case at half the vendor's published figures. The example above uses a 5-day cut, 45 to 40 days.
Frequently asked questions
These questions cover the accounts receivable ROI calculator's exports, sharing, the costs it leaves out and which input matters most; the formulas, the 677% default example and the payback bands sit in the sections above.
Is there an Excel version of this accounts receivable ROI calculator?
The Download CSV button exports your 12 inputs and 9 outputs, labeled, to a file that opens in Excel or Google Sheets. The formulas in the section above rebuild the model in a spreadsheet in a few minutes.
Can I share my results?
Yes. All 12 inputs are written into the page address as you type. Copy link gives you a URL that reopens the calculator with the same figures for a colleague or your accountant.
What does the calculator leave out?
Late fees and interest charged to customers. They are real but depend on your policy, so they sit outside the ROI. Training time is also left out unless you add it to the one-off set-up cost.
Which input moves the ROI most?
In the default example, labor saved is 43% of the annual benefit, bad debt avoided 37% and the financing value of cash released 20%. Check the hours and the bad debt rate before the cost of capital.
Last updated October 12, 2026. This guide is general information, not accounting, tax, or financial advice.