Questions:
What is the relationship between Receivable Days and Receivable Turnover? What do they measure?

Our company currently has an average days of receivables of 29 days, whereas the industry average is 25 days. We currently have sales of $400 million and in the next year, we expect the sales to increase by 10%.

How much will the receivables need to change get our receivables days to match that of the industry?

Reference answers:
# Formulas

There are two key formulas:

Receivables Turnover = Sales / Receivables 

and 

Receivables Days = 365 / Receivables turnover

Both metrics are trying to measure the rate at which companies collect payments for their goods and services. Receivable Days is a direct approximation of the number of days it takes to collect payment. Receivables Turnover is the number of times per year a company is collecting on customers who paid in credit.

# Receivables before the change in policy

To find the current receivables, we can use the Receivables Days formula.
   
Receivables Days = 365 / Receivables turnover
Receivable days / 365 = Sales / Receivables 
Receivables = Sales / 365 * Receivable days

Since sales were $400 million and they had a receivable days of 29,

Receivables = $400 million / 365 * 29 = 31.78 million

# Receivables after the change in policy

After the change in policy, our sales are going to increase to 400 * 1.1 = 440 million dollars. To get our receivable days to 25, our receivables must be,
Receivables = $400 million * 110% / 365 * 25 = 30.14             

# Change in Receivables

We can then say that,

Change in receivables = Receivables after the policy change - Receivables before the policy change 
Change = 30.14 million - 31.78 million = -1.64 million

Therefore, the receivables will need to decrease by 1.64 million in order for the days of receivables to match the industry average.